TIDMWINV
RNS Number : 9828E
Worsley Investors Limited
05 July 2023
5 July 2023
Worsley Investors Limited
(the "Company")
Annual Report for the period ended 31 March 2023
The Company is pleased to announce the release of its annual
report and audited consolidated financial statements for the period
ended 31 March 2023 (the "Annual Report"). A copy of the Annual
Report will be posted to shareholders and will be available to view
on the Company's website shortly at: www.worsleyinvestors.com
For further information, please contact:
Worsley Associates LLP (Investment Advisor)
Blake Nixon
Tel: +44 (0) 203 873 2288
Shore Capital (Financial Adviser and Broker)
Robert Finlay / Anita Ghanekar
Tel: +44 (0) 20 74080 4090
Sanne Fund Services (Guernsey) Limited (Administrator and
Secretary)
Chris Bougourd / Matt Falla
Tel: +44 (0) 20 3530 3109
LEI: 213800AF85VEZMDMF931
Performance Summary
31 March
2023 31 March 2022 % change
-----------------------------
Net Asset Value ("NAV") per
share 43.92p 39.91p 10.05%
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Share price(1) 28.00p 27.70p 1.08%
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Share price discount to NAV 36.25% 30.59%
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year ended year ended
31 March 2023 31 March 2022
Earnings/(loss) per share(2) 3.06p -1.50p
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NAV Total Return(3) 10.05% -3.95%
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Share price Total Return(4)
--------------- ---------------
- Worsley Investors Limited 1.08% -1.07%
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- FTSE All Share Index 2.92% 13.03%
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- FTSE Real Estate Investment
Trust Index -31.01% 22.54%
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Worsley Associates LLP ("Worsley Associates") was appointed on
31 May 2019 as Investment Advisor (the "Investment Advisor") to
Worsley Investors Limited (the "Company"). The Company's Investment
Objective and Policy are set out below.
Past performance is not a guide to future performance.
(1) Mid-market share price (source: Shore Capital and Corporate
Limited).
(2) Earnings/(loss) per share based on the net profit for the
year of GBP1.031 million (31 March 2022: net loss of GBP0.505
million) and the weighted average number of Ordinary Shares in
issue during the year of 33,740,929 (31 March 2022:
33,740,929).
(3) On a pro forma basis which includes adjustments to add back
any prior NAV reductions from share redemptions. NAV Total Return
is a measure showing how the NAV per share has performed over a
period of time, taking into account both capital returns and any
dividends paid to shareholders.
(4) A measure showing how the share price has performed over a
period of time, taking into account both capital returns and any
dividends paid to shareholders.
Source : Worsley Associates LLP and Shore Capital and Corporate
Limited.
Chairman's Statement
The Company overall had a worthwhile year and built on the
performance of the first half to generate a positive NAV net return
of +10.0% for the year as a whole. Within that, the total
annualised return on the capital invested over the period in our
equity portfolio was an excellent+31.1%. Both of these compare very
favourably to the wider market returns on UK equities and real
estate investment companies and particularly on smaller company
equities, which significantly underperformed larger company shares
over both the second half and the full year. Over the year to 31
March 2023, the total return on the FTSE All Share Index was +2.9%
; on the FTSE Small Capitalisation Index, -9.0% and on the FTSE
Real Estate Investment Trust Index, -31.0%. As I reminded
shareholders in my statement with the half-year results, our
portfolio is invested to achieve absolute returns and not to track
or outperform a particular index but equally performance cannot be
completely divorced from the market context. Against that context,
of rising interest rates and of an equity market in the process of
revising its expectations in that regard in the upward direction,
our net results were especially commendable. The Investment Advisor
sets out below its updates on our various equity investments and in
respect of those I have nothing to add here.
The one investment which I shall single out is the Curno cinema
which is let under a long lease with 12 years unexpired to a
subsidiary of UCI, one of the largest global cinema operators. The
lease benefits from an annual upwards-only indexation to Italian
CPI and consequently rental income for 2023 is 11.3% higher than
that for 2022 and is now EUR1.057 million. In valuing the cinema
for the purposes of these financial statements, the independent
valuer has felt it appropriate to increase further the implied
yield, the corollary of which is a further reduction in the local
currency value of the property to the extent of EUR800,000. The
prospective income yield on the 2023 passing rental is now 13.7% on
the basis set out above. We are pleased to note the Italian cinema
sector's strong recovery in box office takings which is being
mirrored at Curno. It is likely to take several quarters of
improved Italian cinema trading and improved visibility on the
trajectory for interest rates in order for real estate investor
interest to return to the extent necessary to allow a sale at an
acceptable level and so, in the meantime, we shall continue to
enjoy the exceptional cashflow yield. As at the year end, the
percentage of NAV represented by the cinema fell further to 45.7%
from 54.4% a year earlier as the arithmetical consequence of both
the reduced valuation appraisal and the continued compounding of
positive returns on our equity portfolio. The effect of currency
movements was negligible over the second half and, over the full
year, the pound sterling weakened against the Euro by around 3.6%.
As we do not hedge the pound sterling/Euro cross rate, it retains
the capacity to influence overall returns, although that influence
will decline over time, all other things being equal, and if, as we
expect, our equity returns continue to compound at a faster rate
than other factors.
I am pleased to note that our share price rose by 20.7% in the
second half on a mid-price basis, recovering the decline of the
first half and resulting in a net increase of 1.1% over the full
year. Nevertheless, over the full year the share price still lagged
our strong NAV performance and so the discount of market price to
NAV widened over the year from 30.6% to 36.2%, albeit that is an
improvement on the 42.3% pertaining at the half-way stage and does
indicate that the share price has latterly begun to catch up on the
NAV per share. In the meantime, we continue to believe that the
Company's shares represent compelling value, especially given the
prospective returns on our assets.
Outlook
Inflation and interest rates will be key to market returns and
the performance of the wider economy over the coming years. While
those components of inflation related to many of the commodities
directly affected by the Ukrainian war have either plateaued or
have begun to decline as was to be expected, others such as retail
food prices remain elevated for now as the effects of the primary
commodity and energy prices are taking time to work through the
supply chains. This, of course, has led to other sources of
contribution to inflation, such as increasing demands for
compensatory wage and salary increases, and, as homeowners will
need to refinance mortgages at much higher interest rates than
those of a few years ago, rises in bank rate themselves become in
the short-term contributors to the very consumer price inflation
which they are intended in the longer term to combat. In this
latter regard, there is significant tightening already in the
system, so to speak, even if Bank of England base interest rates
were to remain flat for a period. We have always expected that Bank
of England rates would reach a level higher than they currently are
and it seems that the wider market is also now of that view.
Whether its expectations or those of the Bank of England's Monetary
Policy Committee overshoot, as has often been the case in past
market cycles, remains to be seen but until the market can begin to
anticipate that process is over, it is difficult to see wider UK
market indices making strong progress. That all of this is
happening in parallel with the electoral cycle is a further source
of uncertainty.
I note in passing that bond yields are in general similar to the
levels which destabilised the Truss administration when the Bank of
England was forced to intervene in markets with liquidity on a
massive scale to ensure stability. This is a powerful illustration
that in markets it is often not the absolute level but the rate of
change that has the greatest effect. It remains the case that the
prospect of rising taxes, lower growth and squeezed living
standards will inevitably restrain general market performance for
the UK smaller company sector which tends to have a greater
domestic exposure than, for example, the FTSE100.
However, we should again remind ourselves that we do not invest
in market averages but rather in specific companies and so we
remain confident that, whether general indices struggle or not, the
scope for positively-differentiated performance by Worsley
Investors Limited remains. With Curno, we are fortunate to enjoy a
very strong cash flow and have no debt to service and consequently
no covenants with which to adhere. A prospective income yield
approaching 13.7% from a good security with a long lease and
continuing upward-only inflation protection should provide a return
in excess of general market levels until such time as confidence
returns to local potential purchasers who value the secure cash
flow as we do.
The sustained operational performance of our investee companies
and the compounding of their share price returns, together with the
strong cash flow from Curno, continues to validate the Worsley
strategy and therefore our confidence for future prospects. The
Company's share price performance has begun to close the gap on its
NAV, albeit the discount to NAV remains wider than we should wish,
and represents, we believe, a compelling value proposition.
Once again, and on behalf of the Board, I would like to thank
our Investment Advisor, Worsley Associates LLP, for the steady
progress they have made in developing our portfolio and to thank
you, our shareholders, for your continuing support.
W. Scott
Chairman
4 July 2023
Investment Advisor's Report
Investment Advisor
The Investment Advisor, Worsley Associates LLP, is regulated by
the FCA and is authorised to provide investment management and
advisory services.
In the year under review, the equities portfolio became fully
invested, and the Investment Advisor has concentrated on its
advancement and oversight of the Curno cinema, the trading of which
was significantly impacted by the very limited 2022 slate of new
feature releases, itself a delayed effect from the severe
interruptions which the COVID-19 pandemic had previously caused to
worldwide movie production.
Curno Cinema Complex
The Group's Italian multiplex cinema complex, located in Curno,
on the outskirts of Bergamo, is let in its entirety to UCI Italia
S.p.A. ("UCI").
The cinema lease documentation remains as amended in June
2020.
The key rental terms of the lease, which has a final termination
date of 31 December 2042, are:
Base Rent
1 January 2023 to 31 December 2023 - EUR1,057,094 per annum.
Base rental is indexed annually to 100% of the Italian ISTAT
Consumer Index on an upwards-only basis. In the five months to 31
May 2023 the index has remained broadly flat.
Variable Rent
Incremental rent is payable at the rate of EUR1.50 per ticket
sold above a minimum threshold of 350,000 tickets per year up to
450,000 tickets per year, rising in 50,000 ticket stages above this
level up to EUR2.50 per extra ticket.
Tenant Guarantee
The lease benefits from a rental guarantee of an initial EUR13
million, reducing over 15 years to EUR4.5 million, given by a U.K.
domiciled European holding company for the UCI group, United
Cinemas International Acquisitions Limited, which has latest
published shareholders' funds of GBP308.8 million.
Tenant break option
UCI has the right to terminate the lease on 30 June 2035.
Trading
The cinema was open throughout the period. From 1 May 2022
COVID-19 passes, which impacted demand, were no longer mandatory,
and from 15 June 2022 the wearing of masks ceased to be
obligatory.
The film slate in the third fiscal quarter was much more robust
than it had been in the first half and, following the release of
the Avatar sequel, Curno ticket sales in the last 15 days of
December and first week or so of January reached 2019 levels. Over
the remainder of the fourth quarter the industry saw weaker trading
owing to a paucity of big movie releases. Nonetheless, ticket sales
at the cinema for the March 2023 quarter were some 48% higher than
the corresponding quarter in 2022.
Since the last week of March there has been a dramatic
improvement in Italian cinema ticket sales as the movie slate moved
into a four month period during which one 'blockbuster' movie after
another is being released. This improvement has been augmented post
COVID-19 by the restored ability to sell food and beverages, and,
in consequence, substantial increases in Curno's total revenue per
customer have been achieved.
Rentals remained current throughout the period.
Valuation
As at 31 March 2023, the Group's independent asset valuer,
Knight Frank LLP, fair valued the Curno cinema at EUR7.7 million
(30 September 2022: EUR8.5 million), and this figure has been
adopted in these Financial Statements.
Since the June 2020 lease amendment, the Board's expectation has
been that the valuation of the Curno cinema would increase once the
enhanced rental began to be generated by the property from 1 March
2021 onwards. The current rental is some 27% higher than the pre
amendment level.
Notwithstanding the 11.3% increase in the level of rental from 1
January 2023, the valuer during the second half determined that the
yield at which it capitalised the rental stream would increase from
10.77% to 12.97%, and those two variations together have had the
net effect of reducing the valuation by some 9.4%. This
particularly cautious approach reflects a continuation of increases
in European rental yields in reaction to the Ukrainian conflict, as
noted in the Interim Report, allied to a dearth of debt finance
being available to finance Italian property acquisitions: the
result being that investors are seeking even higher purchase
yields.
Although the cinema since June 2022 has been fully free from all
direct COVID-19 constraints, film industry production interruptions
enforced by restrictions during the COVID-19 pandemic severely
constrained the number of titles available for release throughout
almost the entirety of calendar 2022. Consequent concerns regarding
Italian cinema trading only served to increase the reluctance of
potential investors to progress interest.
There are expected to be 35% more movie titles released
worldwide in calendar 2023. Given the very strong upswing in
Italian box office takings seen since the beginning of April,
conditions are now much more conducive to a return of investor
appetite once the improvement in trading conditions is more widely
appreciated and become recognised as sustainable. The Group will
retain the Curno cinema until a disposal can be effected at a price
which the board believes properly reflects its medium term
prospects.
Equity Investment Strategy
The Investment Advisor's strategy allies the taking of holdings
in British quoted securities priced at a deep discount to their
intrinsic value, as determined by a comprehensive and robust
research process. Most of these companies will have smaller to
mid-sized equity market capitalisations, which will in general not
exceed GBP600 million. It is intended to secure influential
positions in such British quoted securities, with the employment of
activism as necessary to drive highly favourable outcomes.
The U.K. stock market started the first six weeks of 2023
strongly, on a view that the worst was behind it. Investors formed
the view that, both in the U.K. and the US, the interest rate peak
was in sight and the London market powered forward, reaching an
all-time high on 15 February, with the FTSE100 closing above 8,000
for the first time ever the next day, reflecting a bullish view of
the British economy.
In the period since, US political and monetary policy
developments have replaced the prospects for the U.K. economy as
the largest influence on the British market, fuelled by the
persistence of inflation, and its likely impact.
At the beginning of March, the US Federal Reserve chair warned
that the likely rate peak could well be higher than markets were
expecting. This set off an abrupt slide in equities, exacerbated a
few days later after liquidity issues surfaced at the US
tech-focused bank, SVB Financial, which in turn stoked worries
about runs on other smaller US banks, and by 16 March the British
market had fallen to its low point for calendar 2023.
In the following weeks banking concerns eased with a merger of
UBS with Credit Suisse, European regulators making encouraging
pronouncements about banks in the region and US authorities moving
to guarantee SVB depositors in full. With news flow also pointing
to an easing of US inflation and a strengthening U.K. economy, the
London market on 21 April reached its high for the June
quarter.
From then sentiment went firmly into reverse, after the failure
of First Republic Bank in the US and fears about an impasse in
political negotiations on the US debt ceiling, and the British
market closed May down 4% over the month.
June started with Congress approval of a deal on the debt
ceiling, sparking a sharp upturn in London equities. However, the
recovery ran out of steam on confirmation of a recession in Europe
and after the US Fed at its 14 June monetary meeting surprised
investors with a suggestion that two further rises could be in the
pipeline over the rest of the year. Meanwhile, in the U.K., the
announcement in early June of greater than expected wages inflation
has convinced investors that the Bank of England will need to
tighten monetary conditions further, driving UK gilt yields
higher
The current prognosis is for rates in the U.K. and US to
continue to be raised to a peak of at least 5.5%, and after a
choppy passage the U.K. stock market is down a net 1.8% in the June
quarter to date. Within the Company's target universe of British
smaller companies, since the end of April share prices in general
have not suffered the reversals of fortune of the market as a
whole, and so far in the June quarter the small cap market is up
2.0%.
The Company's portfolio was, in effect, fully invested by the
end of the reporting period. This includes a previously undisclosed
holding of some 1.7% of Net Assets in J. Smart & Co.
(Contractors) PLC ('SMJ'). SMJ is a Scottish company, whose shares
are listed on the London Stock Exchange's Main Market. It has a
market capitalisation of GBP66.5 million and operates two
divisions. The larger of these comprises a portfolio of commercial
and industrial Scottish property. The parent company is also a
long-established, high quality Central Scottish building and civil
engineering contractor. The shares at 165p sell at a substantial
discount to their stated NAV/share as at 31 January of some
GBP3.04.
The largest portfolio position continues to be the shareholding
of just over 4% in Smiths News plc, England's major distributor of
newspapers and magazines. In early May, Smiths News published its
2023 interim results, which disclosed increased profitability, with
sales growing owing to good newspaper cover price increases and
continued cost efficiencies, and debt levels broadly maintained. As
a result of this robust operating performance, the shares have
performed strongly over the past year, although they remain
substantially undervalued, in main because of the company's unduly
restrictive banking facilities, which significantly constrain
shareholder distributions.
In the Interim Report we noted that there was scope for Amedeo
Air Four Plus Limited ('AA4'), once the trading of Thai Air (one of
its two lessees) had normalised, to implement a GBP15 million
capital return and to increase further the level of annual
dividend. In February, AA4 duly announced a GBP28 million partial
compulsory redemption of its shares and an increase in the annual
dividend to seven pence per share. Apart from the reduction
resulting from that redemption, the holding is unchanged. The
shares have performed extremely well in the last six months, but
the price is yet to reflect the considerable equity value inherent
in the group's four A350-900 aircraft leased to Thai Air.
The Northamber plc holding was increased significantly in the
second half, after the shares had weakened on the company posting a
loss for the 2022 year. We took advantage of stock becoming
available in Daniel Thwaites PLC and Shepherd Neame Limited, the
shares in which are both very thinly traded, to substantially
increase our positions. Preliminary (less than 2% of Net Assets)
holdings are also held in nine other companies. During the second
half we exited one position, crystallising a substantial percentage
gain over its cost. Two new positions were initiated.
As at 28 June 2023 the Company's portfolio, which had a total
cost of GBP5.00 million and a combined market value of some GBP7.96
million, comprised 15 stocks. The surplus on the portfolio was just
under 60% of cost, and the annualised return on capital invested
since the current strategy was adopted remains very acceptable at
slightly less than 35%.
Results for the period
Cash revenue from Curno for the year to 31 March 2023 was
EUR976,600 (GBP842,000) ( 31 March 2022: EUR923,700 (GBP790,000)),
both periods reflecting a full 12 months' income. No ticket overage
revenue was earned. Other income of GBP52,000 in the year
represents the reversal of a German legacy provision inherited when
the current board assumed control.
General and administrative expenses (including transaction
charges) of GBP528,000 ( 31 March 2022: GBP530,000) were in line
with expectations. Although the total was almost unchanged overall
from the previous year, as noted in the Interim Report
administration expenses at the Italian subsidiary, Multiplex 1
S.r.l. (' Multiplex'), were significantly lower in the first half.
For the full year Group general expenses were materially higher
than in 2022, the largest variance being because of abnormal
registry costs as previously reported, but the previous year's
figure had also been flattered by the reversal of a GBP6,000 over
accrual for fees. AUM-based costs in the second half were at
similar levels to those in the corresponding period of 2022.
Transaction charges incurred on equity acquisitions were
GBP7,000 ( 31 March 2022: GBP4,000). This reflected a rather higher
level of portfolio turnover than in the previous year.
In the upcoming year the Group's ongoing operating costs are
expected to be somewhat higher than the 2023 level, principally
because of higher AUM-based costs resulting from increased Net
Assets. Prior to the ultimate sale of Curno there continues to be
little scope for significant reduction in the overall cost
base.
The equities portfolio had a very strong third quarter but was
only marginally ahead in the fourth, culminating for the year as a
whole in a good (GBP0.941 million) net investment mark-to-market
gain ( 31 March 2022: GBP 0.161 million reduction). Investment
Income for the year, almost entirely dividends, was GBP559,000 and
net investment gains realised added GBP264,000. As a result, the
total annualised return on capital invested in the portfolio over
the year came out at 31.1%.
Taxation is payable on an ongoing basis on Italian income and in
Luxembourg. For the year, an operating tax charge of GBP90,000 ( 31
March 2022 : GBP51,000) was incurred. In addition, net VAT,
predominantly in Luxembourg, of some GBP5,000 was paid. In the
previous year the Group had benefited from a one-off tax credit at
Multiplex.
In the current year, the inflation linked increase in the Curno
rental will be offset by a return to a much more normal tax rate at
Multiplex and higher AUM-based fees, with the result that operating
cash flow (that is prior to allowance for equity income and net
purchases) is expected to remain modestly positive.
Financial Position
Net Assets at 31 March 2023 were GBP14.819 million, which
compares with the GBP13.577 million contained in the 30 September
2022 Interim Report. The advance arose almost entirely from the
profit in the second half of GBP1.239 million, after a GBP692,000
(EUR800,000) reduction in the Euro valuation of the Curno
property.
The Group's liquidity reduced slightly in the period, reflecting
the portfolio becoming substantially fully invested, with
GBP541,000 in cash held at 31 March 2023 and no debt. However,
given the ample secondary liquidity of the equity portfolio and
positive ongoing cash flows, the Group's financial position remains
robust.
In due course, the sale of the Curno cinema will provide
considerable additional resources for equity investment.
Euro
As at 31 March 2023, some 47% of Total Assets were denominated
in Euros, of which the Curno property was some 44% of Total Assets,
down from 55% as at 31 March 2022. The pound sterling Euro cross
rate moved some 4% during the period from 1.187 as at 31 March 2022
to 1.137 as at 31 March 2023. This cross rate will remain a
potentially significant influence on the level of Group Net Assets
until Curno's disposal.
Outlook
After six months of this year U.K. stock market prices, whilst
volatile, stand at close to their opening level, a reflection of
the continued uncertainties regarding the path of the U.K. economy
and interest rates.
This is in line with the view expressed in the Interim Report
that the full, sustained, impact of normalised interest rates on
overall demand in the economy was yet to be seen. Added to the
impact of increasingly persistent wage inflation, the immediate
prospects for U.K. company earnings are rather subdued.
Calendar 2022 having borne the delayed effect of COVID-19, there
are expected to be 35% more films released worldwide in 2023, and,
equally significant, a heavy schedule of major titles. This has
directly led to movie goers making a strong reappearance in Italian
cinemas.
Against that, there is a paucity of Italian medium term debt
finance available, which continues to weigh on investor demand, and
a disposal of our Curno cinema is not seen as in prospect for the
remainder of 2023. Nevertheless, the asset remains an excellent
generator of inflation protected cash flow for the Group.
We have previously emphasised that the Worsley investment
strategy is relatively insensitive to the shorter term economic
outlook, being directed at the medium-term prospects of individual
companies.
Notwithstanding the final published earnings figures for British
companies in the period generally being in line with negative
trading updates they had previously announced, a proliferation of
smaller stocks have seen their prices fall sharply.
In the vast majority of cases such drops reflect significant
deterioration in underlying prospects, but by the same token the
prices of a number of well-established companies are often so
affected, thus providing a ready supply of potential candidates for
future investment.
The Worsley equity portfolio is prudently constructed, and
notwithstanding the economic uncertainty, which appears set to
continue for at least the remainder of 2023, the Company remains
well positioned to deliver attractive future returns.
Worsley Associates LLP
28 June 2023
Board of Directors
William Scott (Chairman) , a Guernsey resident, was appointed to
the board of the Company as an independent Director on 28 March
2019. Mr Scott also currently serves as an independent
non-executive director of a number of investment companies and
funds, of which Axiom European Financial Debt Fund Limited and RTW
Venture Fund Limited are listed on the Premium Segment of the LSE.
He is also a director of The Flight and Partners Recovery Fund
Limited and a number of funds sponsored by Man and Abrdn (formerly
Standard Life Aberdeen). From 2003 to 2004, Mr Scott worked as
senior vice president with FRM Investment Management Limited, which
is now part of Man Group plc. Previously, Mr Scott was a director
at Rea Brothers (which became part of the Close Brothers group in
1999) from 1989 to 2002 and assistant investment manager with the
London Residuary Body Superannuation Scheme from 1987 to 1989. Mr
Scott graduated from the University of Edinburgh in 1982 and is a
chartered accountant having qualified with Arthur Young (now Ernst
& Young LLP) in 1987. Mr Scott also holds the Securities
Institute Diploma and is a chartered fellow of the Chartered
Institute for Securities & Investment. He is also a chartered
wealth manager. Mr. Scott is a member of the Audit, Risk and
Management Engagement Committees.
Robert Burke , a resident of Ireland, was appointed to the board
of the Company as an independent Director on 28 March 2019. He also
serves as an independent non-executive director of a number of
investment companies and investment management companies which are
domiciled in Ireland as well as a number of companies engaged in
retail activities, aircraft leasing, pharmaceuticals, corporate
service provision and group treasury activities. He is a graduate
of University College Dublin with degrees of Bachelor of Civil Law
(1968) and Master of Laws (1970). He was called to the Irish Bar in
1969 and later undertook training for Chartered Accountancy with
Price Waterhouse (now PricewaterhouseCoopers) in London, passing
the final examination in 1973. He later was admitted as a Solicitor
of the Irish Courts and was a tax partner in the practice of McCann
FitzGerald in Dublin from 1981 to 2005, at which point he retired
from the partnership to concentrate on directorship roles in which
he was involved. He is a member of the Irish Tax Institute. Mr.
Burke is a member of the Audit, Risk and Management Engagement
Committees.
Blake Nixon was one of the pioneers of activism in the UK and
has wide corporate experience in the UK and overseas. Following
three years at Jordan Sandman Smythe (now part of Goldman Sachs), a
New Zealand stockbroker, Mr Nixon emigrated to Australia, where he
spent three years as an investment analyst at Industrial Equity
Limited ("IEL"), then Australia's fourth largest listed company. In
1989 he transferred to IEL's UK operation and early in 1990 led the
takeover of failing LSE listed financial conglomerate, Guinness
Peat Group plc ("GPG"). The group was then relaunched as an
investment company, applying an owner orientated approach to listed
investee companies. Mr Nixon was UK Executive Director, responsible
for GPG's UK operations and corporate function, for the following
20 years, finally retiring as a non-executive director in December
2015. He is a founding partner of Worsley Associates LLP, an
activist fund manager, and has served as a non-executive director
of a number of other UK listed companies, as well as numerous
unlisted companies. He is a British resident and was appointed to
the Board on 23 January 2019. Mr. Nixon is a member of the Risk
Committee and attends Audit and Management Engagement Committee
meetings by invitation.
Report of Directors
The Directors of the Company present their Annual Report
together with the Group's Audited Consolidated Financial Statements
(the "Financial Statements") for the year ended 31 March 2023. The
Directors' Report together with the Financial Statements give a
true and fair view of the financial position of the Group. They
have been prepared properly, in conformity with International
Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board and are in accordance with
any relevant enactment for the time being in force; and are in
agreement with the accounting records.
Principal Activity and Status
The Company is an Authorised closed-ended investment company
domiciled in Guernsey, registered under the provision of the
Companies (Guernsey) Law, 2008 and has a premium listing on the
Official List and trades on the Main Market of the London Stock
Exchange. Trading in the Company's ordinary shares commenced on 18
April 2005. The Company and the entities listed in note 2(f) to the
Financial Statements together comprise the "Group".
Investment Objective and Investment Policy .
The investment objective and investment policy of the Company
are described below in greater detail.
Going Concern
These Financial Statements have been prepared on a going concern
basis. The Directors, at the time of approving the Financial
Statements, have a reasonable expectation that the Group has
adequate resources to continue in operational existence for a
period of at least twelve months from the date of approval of these
Financial Statements. The Group maintains a significant cash
balance and an extensive portfolio of realisable securities, and
the property lease generates sufficient cash flows to pay on-going
expenses and other obligations. The Directors have considered the
cash position and performance of the current capital invested by
the Group, the potential impact on markets and supply chains of
geo-political risks such as the current crisis in Ukraine and
continuing macro-economic factors and inflation and concluded that
it is appropriate to adopt the going concern basis in the
preparation of these Consolidated Financial Statements.
Going concern is assessed over the period until 12 months from
the approval of these Consolidated Financial Statements. Owing to
the fact that the Group currently has no borrowing, has a
significant cash holding and that the Company's equity investments
predominantly comprise readily realisable securities, the Board
considers there to be no material uncertainty. Matters relating to
the going concern status of the Group are also discussed in the
long-term viability statement below.
Viability Statement
The Board has evaluated the long-term prospects of the Group,
beyond the 12 month time horizon assumption within the going
concern framework. The Directors have conducted a review of the
viability of the Company taking account of the predictability of
the key factors which influence the Group's operations, its current
position and the potential impact of risks likely to threaten the
Company's business model, future performance, solvency or
liquidity. For the purposes of this statement the Board has adopted
a three year viability period owing to this being the maximum
period over which the Board considers variances can reasonably be
forecast and estimated. Anything beyond that cannot be stated with
reasonable confidence.
The Directors consider that a 100% fall in the value in the
Company's equity portfolio or a complete default on the lease
rental obligations from the Group's investment property would not
have a fundamental impact on the Company's ability to continue in
operation over the next three years. In reaching this conclusion,
the Directors considered the Company's expenditure projections, the
fact that the Group currently has no borrowing, has a significant
cash holding, the contribution derived from the investment property
provides sufficient liquidity with which to meet its cash flow
requirements and that the Company's equity investments
predominantly comprise readily realisable securities, which in
extremis could be expected to be sold to meet funding requirements
if necessary, assuming usual market liquidity.
The Directors in forming this view also considered the long
operational history and track record of the Group's investment
property, Curno.
In addition, the Board has assumed that the regulatory and
fiscal regimes under which the Group operates will continue in
broadly the same form during the viability period. The Board
consults with its broker and legal advisers to the extent required
to understand issues impacting on the Company's regulatory and
fiscal environment. The Administrator also monitors changes to
regulations and advises the Board as necessary.
Based on the Company's processes for monitoring operating costs,
internal controls, the Investment Advisor's performance in relation
to the investment objective, the portfolio risk profile and
liquidity risk, the Board has concluded that there is a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the three year
period.
Results and Dividends
These Financial Statements are made up for the year ended 31
March 2023.
The results for the year are set out in the Consolidated
Statement of Comprehensive Income.
No dividend payments were paid in the year (31 March 2022:
none).
Directors and their interests
The Directors who served during the year and up to the date of
this report and their interests in the shares of the Company (all
of which are beneficial) were:
31 March 2023 31 March 2022
--------------------- --------------------
W. Scott (Chairman) 678,811 2.01% 400,000 1.19%
B. A. Nixon 10,083,126 29.88% 10,083,126 29.88%
R. H. Burke nil nil nil nil
At the date of this report, Mr Nixon holds 10,083,126 shares,
being an interest of 29.88% in the shares of the Company and Mr
Scott holds 678,811 shares, being an interest of 2.01% in the
shares of the Company.
No other Director has a beneficial interest in the Company or
any of the Group entities.
Mr Nixon, a Director of the Company, is also Founding Partner of
the Investment Advisor.
The Directors' biographies are disclosed above.
Management
The Company is a self-managed AIF under the AIFM Directive and,
as such, the Board performs certain management functions, which
include oversight of the Company's investment strategy, and any
necessary risk management and portfolio management functions.
With effect from 31 May 2019 the Board appointed Worsley
Associates LLP as its Investment Advisor to oversee on a day-to-day
basis the assets of the Company. A summary of the financial terms
of the contract between the Company and the Investment Advisor in
respect of the advisory services provided is given in note 3 to the
Financial Statements.
In connection with this, the Investment Advisor undertakes
certain of the support functions in respect of the routine
management of the Company's investment portfolio, corporate
structure and affairs and advises the Company in relation to its
investments and other ongoing services. The discretionary portfolio
management of substantially all of the Group's assets (including
uninvested cash), however, remains with the Board to be dealt with
in accordance with the Investment Objective and Investment
Policy.
Listing Requirements
Throughout the year the Company's shares were admitted to the
Official List of the London Stock Exchange maintained by the
Financial Conduct Authority ("FCA") and it has complied with the
Listing Rules.
Investee Engagement
The nature of the Company's investments is such that it often
seeks to acquire substantial shareholdings which provide a direct
route via which to influence investee companies. The Company's
focus is on investees' medium-term financial performance, and, if
necessary, it will press them to adopt governance practices which
ensure that they are properly accountable to their shareholders for
the delivery of sustainable shareholder value. This active
involvement is outside the scope of many traditional institutional
shareholders. In matters which may affect the success of the
Company's investments the Board and the Investment Advisor work
together to ensure that all relevant factors are carefully
considered and reflected in investment decisions.
In carrying out its investment activities the Company aims to
conduct itself responsibly, ethically and fairly.
International Tax Reporting
For purposes of the US Foreign Accounts Tax Compliance Act, the
Company is registered with the US Internal Revenue Service ("IRS")
as a Guernsey reporting Foreign Financial Institution ("FFI"), has
received a Global Intermediary Identification Number
(G0W47U.99999.SL.831), and can be found on the IRS FFI list.
The Common Reporting Standard ("CRS"), which came into effect on
1 January 2016, is a global standard for the automatic exchange of
financial account information, developed by the Organisation for
Economic Co-operation and Development ("OECD"), and has been
adopted by Guernsey. The Board has taken the necessary action to
ensure that the Company is compliant with Guernsey regulations and
guidance in this regard.
Significant Shareholdings
As at 1 June 2023, shareholders with 3% or more of the voting
rights are as follows:
Shares held % of issued
share capital
B.A. Nixon 10,083,126 29.88%
------------ ---------------
The Bank of New York (Nominees)
Limited 3,367,892 9.98%
------------ ---------------
Transact Nominees Limited 3,350,919 9.93%
------------ ---------------
Chase Nominees Limited 2,522,420 7.48%
------------ ---------------
State Street Nominees Limited 2,075,804 6.15%
------------ ---------------
BBHISL Nominees Limited 1,800,000 5.33%
------------ ---------------
Lion Nominees Limited 1,509,364 4.47%
------------ ---------------
Platform Securities Nominees
Limited 1,162,707 3.44%
------------ ---------------
Guernsey Financial Services Commission Code of Corporate
Governance
The Board of Directors confirms that, throughout the year
covered by the Financial Statements, the Company complied with the
Code of Corporate Governance issued by the Guernsey Financial
Services Commission, to the extent it was applicable based upon its
legal and operating structure and its nature, scale and
complexity.
Anti-Bribery and Corruption
The Company adheres to the requirements of the Prevention of
Corruption (Bailiwick of Guernsey) Law, 2003. In consideration of
the UK Bribery Act 2010, the Board abhors bribery and corruption of
any form and expects all the Company's business activities, whether
undertaken directly by the Directors themselves or by third parties
on the Company's behalf, to be transparent, ethical and beyond
reproach.
Criminal Finances Act
The Directors of the Company have a zero-tolerance commitment to
preventing persons associated with it from engaging in criminal
facilitation of tax evasion. The Board has satisfied itself in
relation to its key service providers that they have reasonable
provisions in place to prevent the criminal facilitation of tax
evasion by their own associated persons and will not work with
service providers who do not demonstrate the same zero-tolerance
commitment to preventing persons associated with them from engaging
in criminal facilitation of tax evasion.
Independent Auditor
BDO Limited served as the Company's Independent Auditor
throughout the year and has indicated its willingness to continue
in office.
Annual General Meeting
The next AGM of the Company is scheduled to be held on 13
September 2023.
Directors' Responsibilities
The Directors of the Company are responsible for preparing for
each financial year an annual report and the Financial Statements
which give a true and fair view of the state of affairs of the
Group and of the respective results for the period then ended, in
accordance with applicable Guernsey law and Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB"). In preparing these Financial Statements,
the Directors are required to:
select suitable accounting policies and apply them
consistently;
- make judgements and estimates which are reasonable and
prudent;
- prepare the Financial Statements on a going concern basis
unless it is inappropriate to presume that the Group will continue
in business; and
- state whether or not applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the Financial Statements.
The Directors confirm that they have complied with the above
requirements in preparing the Financial Statements.
The Directors are responsible for keeping proper accounting
records which are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that its
financial statements comply with the Companies (Guernsey) Law,
2008. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements which are free from material misstatement, whether owing
to fraud or error, and have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the
Company and to prevent and detect fraud and other
irregularities.
Disclosure of Information to Auditors
So far as each Director is aware, all relevant information has
been disclosed to the Company's Auditor; and each Director has
taken all the steps which he ought to have taken as a director to
make himself aware of any relevant audit information and to
establish that the Company's Auditor is aware of that
information.
Responsibility Statement
Each of the Directors, whose names and functions are listed
above, confirms to the best of that person's knowledge and
belief:
-- the Financial Statements, prepared in accordance with the
IFRS as endorsed by the IASB, give a true and fair view of the
assets, liabilities, financial position and profit of the Group, as
required by DTR 4.1.12R of the Disclosure and Transparency Rules,
and are in compliance with the requirements set out in the
Companies (Guernsey) Law, 2008;
-- the Financial Statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary
for the shareholders to assess the Group's position, performance,
business model and strategy; and
-- the Financial Statements including information detailed in
the Chairman's Statement, the Report of the Directors, the
Investment Advisor's report, the Corporate Governance report and
the notes to the Financial Statements, include a fair review of the
development and performance of the business and the position of the
Group together with a description of the principal risks and
uncertainties that it faces, as required by:
- DTR 4.1.8 and DTR 4.1.9 of the Disclosure and Transparency
Rules, being a fair review of the Group's business and a
description of the principal risks and uncertainties facing the
Group; and
- DTR 4.1.11 of the Disclosure and Transparency Rules, being an
indication of important events which have occurred since the end of
the financial period and the likely future development of the
Group.
Signed on behalf of the Board by:
W. Scott
Director
4 July 2023
Corporate Governance Report
On 18 December 2019, the Company became a member of the
Association of Investment Companies ("AIC") and except as noted
herein complies with the 2019 AIC Code of Corporate Governance
issued in February 2019 ("the AIC Code"), effective for accounting
periods commencing on or after 1 January 2019. By complying with
the AIC Code, the Company is deemed to comply with both the UK
Corporate Governance Code (July 2018) (the "UK Code") issued by the
Financial Reporting Council ("FRC") and the Code of Corporate
Governance issued by the Guernsey Financial Services Commission
(the "GFSC Code").
The Board considers that reporting against the principles and
recommendations of the AIC Code provides appropriate information to
shareholders and during the period the Board has reviewed its
policies and procedures against the AIC Code.
The GFSC Code provides a governance framework for GFSC licensed
entities, authorised and registered collective investment schemes.
Companies reporting against the UK Code or the AIC Code are deemed
to comply with the GFSC Code. The AIC Code is available on the
AIC's website, www.theaic.co.uk.
For the year ended 31 March 2023, the Company has complied with
the recommendations of the AIC Code and the relevant provisions of
the UK Code, except for the following provisions relating to:
-- the role of the Chief Executive
-- Senior Independent Director;
-- the need for an internal audit function;
-- the whistle blowing policy;
-- Remuneration Committee; and
-- Nomination Committee
The Board considers these provisions are not relevant given the
nature, scale and lack of complexity of the Company and its legal
and operating structure as a self-managed investment company. The
Company has therefore not reported further in respect of these
provisions. Details of compliance are noted below. The absence of
an Internal Audit function is discussed in the Audit Committee
Report.
The Directors are non-executive and the Company does not have
any employees, hence no Chief Executive, Executive Directors'
remuneration nor whistle-blowing policy is required. The Board is
satisfied that any relevant issues can be properly considered by
the Board. Moreover, the Directors have satisfied themselves that
the Company's service providers have appropriate whistle-blowing
policies and procedures and have received confirmation from the
service providers that nothing has arisen under those policies and
procedures which should be brought to the attention of the
Board.
Composition, Independence and Role of the Board
The Board currently comprises three non-executive Directors.
Both Mr Scott and Mr Burke are considered by the Board to be
independent of the Company's Investment Advisor. Mr Nixon is
Founding Partner of the Investment Advisor and is therefore not
independent.
Whilst Mr Nixon is not an independent director, the presence of
two other directors who are independent and non-executive mitigates
the risk of Mr Nixon acting against the Company's interest.
Mr Scott was appointed to serve forthwith as Chairman of the
Company on 28 March 2019. The Chairman of the Board must be
independent for the purposes of Chapter 15 of the Listing Rules. Mr
Scott is considered independent because he:
-- has no current or historical employment with the Investment Advisor;
-- has not provided professional services to the Investment Advisor; and
-- has no current directorships in any other investment funds managed by the Investment Advisor.
Notwithstanding the Articles of Association of the Company not
specifying any limit to the tenure of any director, although
triennial re-election is required, the Board has adopted a policy
whereby the directors, including the Chairman, are subject to
biennial re-election by shareholders (apart from Mr. Nixon, who is
subject to annual re-election) and, subject to there being no
change in his or her status in respect of the independence criteria
set out above, the Chairman may freely stand for re-election until
his or her tenure would in the aggregate exceed nine years. At that
point, the Board will consider, in accordance with the AIC Code,
whether or not he remains independent and, if so, if it would be
appropriate for him to stand for annual re-election bearing in mind
the countervailing benefits of board refreshment and
continuity.
The Board has overall responsibility for maximising the
Company's success by directing and supervising the affairs of the
business and meeting the appropriate interests of shareholders and
relevant stakeholders, while enhancing the value of the Company and
also ensuring protection of investors. A summary of the Board's
responsibilities is as follows:
-- statutory obligations and public disclosure;
-- strategic direction and financial reporting;
-- risk assessment and management including reporting
compliance, governance, monitoring and control; and
-- other matters having a material effect on the Company.
The Board is responsible to shareholders for the overall
management of the Company.
The Board needs to ensure that the Annual Report and Financial
Statements, taken as a whole, are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Company's performance, business model and strategy. In seeking
to achieve this, the Directors have set out the Company's
investment objective and policy and have explained how the Board
and its delegated Committees operate and how the Directors review
the risk environment within which the Company operates and set
appropriate risk controls. Furthermore, throughout the Annual
Report and Financial Statements the Board has sought to provide
further information to enable shareholders better to understand the
Company's business and financial performance.
The Board's responsibilities for the Annual Report are set out
in the Directors' Responsibility Statement.
The Board is also responsible for issuing half yearly reports,
NAV updates and other price sensitive public reports.
The Board does not consider it appropriate to appoint a Senior
Independent Director. The Board believes it has a good balance of
skills and experience to ensure it operates effectively. The
Chairman is responsible for leadership of the Board and ensuring
its effectiveness.
The Board has engaged external businesses to undertake the
investment advisory and administrative activities of the Company.
Documented contractual arrangements are in place with these
businesses and these define the areas where the Board has delegated
responsibility to them. The Board has adopted a schedule of matters
specifically reserved for its decision-making and distinguished
these from matters it has delegated to the Company's key service
providers.
The Company holds regular board meetings to discuss general
management, structure, finance, corporate governance, marketing,
risk management, compliance, asset allocation and gearing,
contracts and performance. The quarterly Board meetings are the
principal source of regular information for the Board enabling it
to determine policy and to monitor performance, compliance and
controls which are supplemented by communication and discussions
throughout the year.
A representative of each of the Investment Advisor and
Administrator attends each Board meeting either in person or by
telephone, thus enabling the Board fully to discuss and review the
Company's operation and performance. Each Director has direct
access to the Investment Advisor and Company Secretary and may at
the expense of the Company seek independent professional advice on
any matter. The Company maintains appropriate Directors' and
Officers' liability insurance.
Conflicts of interest of directors
Directors are required to disclose all actual and potential
conflicts of interest as they arise for approval by the Board, who
may impose restrictions or refuse to authorise conflicts. The
process of consideration and, if appropriate, approval will be
conducted only by those Directors with no material interest in the
matter being considered. The Board maintains a Conflicts of
Interest policy which is reviewed periodically and a Business
Interests and Potential Conflicts of Interest register which is
reviewed by the Board at each quarterly Board meeting.
Re-election of directors
There are provisions in the Company's Articles of Incorporation
which require Directors to seek re-election on a periodic basis.
There is no limit on length of service, nor is there any upper age
restriction on Directors. The Board considers that there is
significant benefit to the Company arising from continuity and
experience among directors, and accordingly does not intend to
introduce restrictions based on age or tenure. It does, however,
believe that shareholders should be given the opportunity to review
membership of the Board on a regular basis.
The Board believes that, while regular rotation is in keeping
with good governance, the unquestionable benefits of ensuring that
there is some continuity mean that it is in the best interests of
the Company that not all Directors offer themselves for re-election
each year. The Company may terminate the appointment of a Director
immediately on serving written notice and no compensation is
payable upon termination of office as a director of the Company
becoming effective.
In accordance with the Company's Articles of Incorporation, at
each AGM all Directors who held office at the two previous AGM's
and did not retire shall retire from office and shall be available
for re-election. Messrs. Burke and Nixon will stand for re-election
at this year's AGM. Mr Nixon as Founding Partner and a Designated
Member of Worsley Associates LLP stands annually. Further details
regarding the experience of each of the Directors are set out
above.
Board Diversity
The Company is Premium Listed on the Main Market of the London
Stock Exchange and consequently subject to changes to the Listing
Rules promulgated by the FCA in order to promote diversity of
characteristics in board and executive membership and which took
effect for accounting periods commencing on or after 1 April 2022.
The Company has three directors, all of whom are male and none of
whom is from a minority ethnic background. As at the Reference Date
of 31 March 2023 and throughout the year then ended, the new
targets set out at Listing Rule 9.8.6(9) were not met.
Worsley Investors Limited is a very small company with a market
capitalisation of approximately GBP10 million and a net asset value
of approximately GBP15million. It is not a constituent of the
FTSE350 Index, nor the FTSE Small Cap Index, and so is out of scope
with regard to the Davies Report on "Women on Boards", the Parker
review into ethnic diversity and the Hampton-Alexander review on
gender balance in FTSE leadership. However, the Board is cognisant
of the practices codified in these reports and, as recommended in
the Davies Report, the Board has reviewed its composition. The
Board's conclusion from this review is that it believes that the
current appointments provide an appropriate and broad range of
skills and experience, are in the interests of shareholders and, in
light of this and the disproportionate effect on the expense ratio
for such a small company of appointing additional directors, no
plans to appoint further directors are in contemplation.
Board Evaluation and Succession Planning
The Board conducts an annual self-evaluation of its performance
and that of the Company's individual Directors, which is led by the
Chairman and, as regards the Chairman's performance evaluation, by
the other Directors. The annual self-evaluation considers how the
Board functions as a whole taking balance of skills, experience and
length of service into consideration and also reviews the
individual performance of its members.
To facilitate this annual self-evaluation, the Company Secretary
circulates a detailed questionnaire to each Director and a separate
questionnaire for the evaluation of the Chairman. The
questionnaires, once completed, are returned to the Company
Secretary who collates responses, prepares a summary and discusses
the Board evaluation with the Chairman prior to circulation to the
remaining Board members. The performance of the Chairman is
evaluated by the other Directors. On occasions, the Board may seek
to employ an independent third party to conduct a review of the
Board.
The Board considers it has a breadth of experience relevant to
the Company, and the Directors believe that any changes to the
Board's composition can be managed without undue disruption. An
induction programme has been prepared for any future Director
appointments and all Directors receive other relevant training as
necessary .
Board and Committee Meetings
The table below sets out the number of scheduled Board, Audit
Committee and Management Engagement Committee meetings held during
the year ended 31 March 2023 and, where appropriate, the number of
such meetings attended by each Director who held office during the
same period.
Risk Committee Management Engagement
Board of Directors Audit Committee Committee
------------- ----------------------- ----------------------- ----------------------- ------------------------
Scheduled Attended Scheduled Attended Scheduled Attended Scheduled Attended
------------- ----------- ---------- ----------- ---------- ----------- ---------- ------------ ----------
W. Scott
(Chairman) 5 5 3 3 3 3 1 1
R. H. Burke 5 4 3 2 3 2 1 1
B. A. Nixon 5 5 3* 3* 3 3 1* 1*
------------- ----------- ---------- ----------- ---------- ----------- ---------- ------------ ----------
*In attendance by
invitation
In normal circumstances the Board intends to meet not less than
four times per year on a quarterly basis in addition to such ad hoc
meetings as may be necessary.
Audit Committee
The Company has established an Audit Committee with formal
duties and responsibilities. The Audit Committee meets formally at
least twice a year and each meeting is attended by the independent
external auditor and Administrator. The Company's Audit Committee
is comprised of Mr Burke and Mr Scott. At the invitation of the
Audit Committee, Mr. Nixon may attend meetings of the Committee.
The Audit Committee is chaired by Mr Burke. The Company does not
maintain an internal audit function, and, given that there are only
three Directors, the Chair of the Board is a member of the
Committee.
The Audit Committee monitors the performance of the auditor, and
also examines the remuneration and engagement of the auditor, as
well as its independence and any non-audit services provided by it.
A report of the Audit Committee detailing its responsibilities and
its key activities is presented below.
Risk Committee
The Company has established a Risk Committee with formal duties
and responsibilities. The Risk Committee meets formally at least
twice a year. The Risk Committee is comprised of the entire Board
and is chaired by Mr Scott. The principal function of the Risk
Committee is to identify, assess, monitor and, where possible,
oversee the management of risks to which the Company's investments
are exposed, with regular reporting to the Board. The Directors
have appointed the Risk Committee to manage the additional risks
faced by the Company as well as the disclosures to be made to
investors and the relevant regulators.
The Risk Committee reviews the robustness of the Company's risk
management processes, the integrity of the Company's system of
internal controls and risk management systems, and the
identification and management of risks through the use of the
Company's risk matrix. The Risk Committee reviews the principal,
emerging, and other risks relevant to the Company.
The Risk Committee reports on the internal controls and risk
management systems to the Board of Directors. The Board of
Directors is responsible for establishing the system of internal
controls relevant to the Company and for reviewing the
effectiveness of those systems. The review of internal controls is
an on-going process for identifying and evaluating the risks faced
by the Company, designed to manage effectively rather than attempt
to eliminate business risks, to ensure the Board's ability to
achieve the Company's business objectives.
It is the responsibility of the Board to undertake the risk
assessment and review of the internal controls in the context of
the Company's objectives in relation to business strategy, and the
operational, compliance and financial risks facing the Company.
These controls are operated in the Company's main service
providers: the Investment Advisor and Administrator. The Board
receives regular updates and undertakes an annual review of each
service provider.
The Company is a closed-ended investment company which has no
employees. The Company operates by outsourcing significant elements
of its operations to reputable professional companies, which are
required to comply with all relevant laws and regulations.
The Board of Directors considers the arrangements for the
provision of Investment Advisor and Administration services to the
Company and as part of the annual review the Board considered the
quality of the personnel assigned to handle the Company's affairs,
the investment process and the results achieved to date.
The Board is satisfied that each service provider has effective
controls in place to control the risks associated with the services
which they are contracted to provide to the Company and therefore
the Board is satisfied with the internal controls of the
Company.
Management Engagement Committee
The Company has established a Management Engagement Committee
with formal duties and responsibilities. The Management Engagement
Committee meets formally at least once a year. The Management
Engagement Committee is comprised of Mr Burke and Mr Scott. The
principal function of the Management Engagement Committee is to
ensure that the Company's investment advisory arrangements are
competitive and reasonable for the shareholders, along with the
Company's agreements with all other third party service providers
(other than the external auditor).
During the period the Management Engagement Committee has
reviewed the services provided by the Investment Advisor and other
service providers, and recommended that the continuing appointments
of the Company's service providers was in the best interests of the
Company. The Management Engagement Committee is chaired by Mr
Scott.
Nomination Committee
The Board does not have a separate Nomination Committee. The
Board as a whole fulfils the function of a Nomination Committee.
Any proposal for a new Director will be discussed and approved by
the Board, giving full consideration to succession planning and the
leadership needs of the Company.
Remuneration Committee
In view of its non-executive nature, the Board considers that it
is not appropriate for there to be a separate Remuneration
Committee, as anticipated by the AIC Code, because this function is
carried out as part of the regular Board business. A Remuneration
Report prepared by the Board is contained in the Financial
Statements below.
Terms of Reference
All Terms of Reference for Committees are available from the
Company's website (www.worsleyinvestors.com).
Internal Controls
The Board is ultimately responsible for establishing and
maintaining the Company's system of internal controls and for
maintaining and reviewing its effectiveness. The system of internal
controls is designed to manage rather than to eliminate the risk of
failure to achieve business objectives and by its nature can only
provide reasonable and not absolute assurance against misstatement
and loss. These controls aim to ensure that assets of the Company
are safeguarded, proper accounting records are maintained and the
financial information for publication is reliable.
The Board has delegated the day-to-day management of the
Company's investment portfolio and the administration, registrar
and corporate secretarial functions including the independent
calculation of the Company's NAV and the production of the Annual
Report and Financial Statements, which are independently audited.
Whilst the Board delegates responsibility, it retains
accountability for the functions it delegates and is responsible
for the systems of internal control.
Formal contractual agreements have been put in place between the
Company and providers of these services. On an ongoing basis, board
reports are provided at each quarterly board meeting from the
Investment Advisor, Administrator and Company Secretary and
Registrar; and a representative from the Investment Advisor is
asked to attend these meetings.
In accordance with Listing Rule 15.6.2 (2) R the Directors
formally appraise the performance and resources of the Investment
Advisor on an annual basis. In the opinion of the Directors their
continuing appointment of the Investment Advisor on the terms
agreed is in the interests of the Company and the shareholders.
The Investment Advisor was appointed on 31 May 2019.
The Board has reviewed the need for an internal audit function
and owing to the size of the Company and the delegation of
day-to-day operations to regulated service providers, an internal
audit function is not considered necessary. The Directors will
continue to monitor the systems of internal controls in place in
order to provide assurance that they operate as intended.
Principal Risks and Uncertainties
In respect of the Company's system of internal controls and its
effectiveness, the Directors:
-- are satisfied that they have carried out a robust assessment
of the emerging and principal risks facing the Group, including
those that would threaten its business model, future performance,
solvency or liquidity; and
-- have reviewed the effectiveness of the risk management and
internal control systems including material financial, operational
and compliance controls (including those relating to the financial
reporting process) and no significant failings or weaknesses were
identified.
The principal risks and uncertainties which have been identified
have remained unchanged in both the nature and the level of risk
during the year and the steps which are taken by the Board to
mitigate them are as follows:
Investment Risks
The Company is exposed to the risk that its investment portfolio
and the remaining investment property fail to perform in line with
the Company's objectives. The Company is exposed to the risk that
markets move adversely. The Board reviews reports from the
Investment Advisor at each quarterly Board meeting and at other
times when expedient, paying particular attention to the
diversification of the portfolio and to the performance and
volatility of underlying investments. If any risks are identified
the Board will ensure that any remediation required is actioned on
a timely basis.
Operational Risks
The Company is exposed to the risk arising from any failures of
systems and controls in the operations of the Investment Advisor,
Administrator and the Corporate Broker. The Board and its
Committees regularly review reports from the Investment Advisor and
the Administrator on their internal controls. If any risks are
identified the Board will ensure that any remediation required is
actioned on a timely basis.
Accounting, Legal and Regulatory Risks
The Company is exposed to the risk that it may fail to maintain
accurate accounting records, fail to comply with requirements of
its Prospectus or fail to adapt its processes to changes in law or
regulations. The accounting records prepared by the relevant
service providers are reviewed by the Investment Advisor. The
Administrator, Corporate Broker and Investment Advisor provide
regular updates to the Board on compliance with the Prospectus and
any changes in regulation.
Financial Risks
The financial risks, including market, credit, liquidity and
interest rate risk faced by the Company are set out in note 14 of
the Financial Statements. These risks and the controls in place to
reduce the risks are reviewed at the quarterly Board meetings.
Foreign Exchange Risk
The Company is exposed to currency risk given that the assets of
its subsidiaries are predominantly denominated in Euro but the
presentation currency of the Company is pounds sterling. The
Investment Advisor reports at least quarterly to the Board on the
strategy for managing this risk. Although the Company has the
ability to hedge this risk, it has not to date chosen to do so and
has no plans to make such arrangements.
Emerging Risks
The Board is alert to the identification of any new or emerging
risks through the ongoing monitoring of the Company's investment
portfolio and by conducting regular reviews of the Company's risk
assessment matrix. Should an emerging risk be identified the risk
assessment matrix is updated and appropriate mitigating measures
and controls will be agreed.
Non-Audit Services Policy
The Company has implemented a policy in relation to the
engagement of the external auditor, BDO Limited, to perform
non-audit services. As a Market Traded Company ("MTC"), since March
2020, the Company is classified as an EU/UK Public Interest Entity
("PIE") for the purposes of FRCs Ethical Standard. Accordingly, the
Audit Committee must consider whether or not the provision of such
non-audit services is compatible with the list of permissible
services under the FRC's UK Ethical Standards:
The Audit Committee reviews the need for non-audit services,
authorises such on a case by case basis, and recommends an
appropriate fee for such non-audit services to the Board.
The Board considers the actual, perceived and potential impact
upon the independence of the external auditor prior to engaging the
external auditor to undertake any non-audit service, as well as
confirming that any non-audit services are included on the list of
permissible services, as amended from time to time by the FRC.
The Board reserves the right to review the policy periodically
and, if required, amend it to ensure that the policy is compliant
with all applicable law and regulation and best practice.
Promotion of the success of the Company
The Board acts in a manner which is considered to be:
-- in good faith;
-- likely to promote the continuing success of the Company; and
-- to the benefit of its shareholders as a whole.
Whilst the primary duty of the Directors is owed to the Company,
the Board considers as part of its discussions and decision making
process the interests of all stakeholders.
The Board is committed to maintaining high standards of
corporate governance and accountability.
As an investment company, the Company does not have any
employees and conducts its core operations through third party
service providers, which apart from the shareholders are the only
significant stakeholders. Each provider has an established track
record and, through regulatory oversight and control, is required
to have in place suitable policies and procedures to ensure it
maintains high standards of business conduct, treats customers
fairly, and employs corporate governance best practice.
Relations with Shareholders
The Board welcomes shareholders' views and places great
importance on communication with its shareholders. The Board
receives regular reports on the views of shareholders and the
Chairman and other Directors are available to meet shareholders if
required. The Investment Advisor meets with major shareholders on a
regular basis and reports to the Board on these meetings. Issues of
concern can be addressed by any shareholder in writing to the
Company at its registered address. The AGM of the Company provides
a forum for shareholders to meet and discuss issues with the
Directors and Investment Advisor of the Company. In addition, the
Company maintains a website (www.worsleyinvestors.com) which
contains comprehensive information, including regulatory
announcements, share price information, financial reports,
investment objectives and strategy and investor contacts.
Relations with other stakeholders.
Specific consideration is given to the continued alignment
between the activities of the Company and those which contribute to
delivering the Board's strategy, which include the Investment
Advisor, the Corporate Broker and the Administrator.
In particular, open and collaborative dialogue is maintained
between the Board and the Investment Advisor, a representative of
which is required to attend all Board meetings. In addition, each
Director has direct access to the Investment Advisor.
The Board receives regular updates from and undertakes an annual
review of each service provider.
In its relationship with suppliers, the Company aims to conduct
itself responsibly, ethically and fairly.
The Management Engagement Committee is charged by the Board with
ensuring that the Company's investment advisory arrangements are
competitive and reasonable for the shareholders, along with the
Company's agreements with all other third party service providers
(other than the external auditor).
The Board respects and welcomes the views of all stakeholders.
Any queries or areas of concern regarding the Company's operations
can be raised with the Company Secretary.
Signed on behalf of the Board by:
W. Scott
Chairman
4 July 2023
Audit Committee Report
Dear Shareholders,
I am pleased to present the Audit Committee's Report for the
year ended 31 March 2023, which covers the following topics:
-- Responsibilities of the Audit Committee and its key activities during the period,
-- Financial reporting and significant areas of judgement and estimation,
-- Independence and effectiveness of the external auditor, and
-- Internal control and risk management systems.
The Company remains in a transition period until the Curno
investment property is disposed of. The Audit Committee's
activities during the year have therefore concentrated on
maintaining an appropriate risk and control environment, providing
suitable disclosure of progress and residual risks in the Financial
Statements, ensuring ongoing engagement from service providers and
maintaining sufficient liquid funds to meet expenditure for
essential or justified items.
Responsibilities
The Audit Committee reviews and recommends to the Board for
approval or otherwise, the Financial Statements of the Company and
is the forum through which the independent external auditor reports
to the Board of Directors. The independent external auditor and the
Audit Committee, if either considers this to be necessary, will
meet together without representatives of either the Administrator
or Investment Advisor being present.
The responsibilities of the Audit Committee include:
1. Monitoring the integrity of the Financial Statements of the Company covering:
-- formal announcements relating to the Company's financial performance;
-- significant financial reporting issues and judgements;
-- matters raised by the external auditor; and
-- appropriateness of accounting policies and practices.
2. Reviewing and considering the AIC Code and FRC Guidance on Audit Committees.
3. Monitoring the quality and effectiveness of the independent
external auditor, which includes:
-- meeting regularly to discuss the audit plan and the subsequent findings;
-- considering the level of fees for both audit and non-audit work;
-- reviewing independence, objectivity, expertise, resources and qualification; and
-- making recommendations to the Board on their appointment,
reappointment, replacement and remuneration.
4. Reviewing the Company's procedures for prevention, detection
and reporting of fraud, bribery and corruption, and
5. Monitoring and reviewing the internal control and risk
management systems of the service providers together with the need
for a Company Internal Audit function.
The Audit Committee's full terms of reference can be obtained
from the Company's website (www.worsleyinvestors.com).
Financial Reporting
The Audit Committee's review of the Audited Annual Report and
Financial Statements focused on the following significant
risks;
Valuation of Investment Property
The Company's sole remaining investment property was
independently valued at GBP6.77 million (EUR7.70 million) as at 31
March 2023 (31 March 2022: GBP7.33 million (EUR8.70 million)) and
represented the major asset of the Group. The property comprises a
cinema complex in Curno, Italy, owned via an intermediate holding
company. The valuation of this investment is in accordance with the
requirements of IFRS as issued by the International Accounting
Standards Board. The valuation estimate is provided by Knight Frank
LLP, an external independent valuer. The Audit Committee considers
the fair value of the sole investment property held by the Group as
at 31 March 2023 to be reasonable based on information provided by
the Investment Advisor and Administrator. All valuations are also
subject to review and oversight by the Investment Advisor.
Valuation of investments
The Company's non-property investments had a fair value of
GBP7.84million as at 31 March 2023 (31 March 2022: GBP5.97
million). The investments are all listed. The Committee considered
the fair value of the investments held by the Company as at 31
March 2023 to be reasonable based on information provided by the
Investment Advisor and Administrator. All prices are confirmed to
independent pricing sources as at 31 March 2023 by the
Administrator and are subject to a review process at the
Administrator and oversight at the Investment Advisor.
Audit Findings Report
The independent external auditor reported to the Audit Committee
that no material unadjusted misstatements were found in the course
of their work. Furthermore, the Investment Advisor and
Administrator confirmed to the Audit Committee that they were not
aware of any material unadjusted misstatements including matters
relating to the Financial Statements presentation.
Accounting Policies & Practices
The Audit Committee has assessed the appropriateness of the
accounting policies and practices adopted by the Group together
with the clarity of disclosures included in the Financial
Statements. Following a review of the presentations and reports
from the Administrator and consulting where necessary with the
independent external auditor, the Audit Committee is satisfied that
the Financial Statements appropriately address the critical
judgements and key estimates (both in respect to the amounts
reported and the disclosures). It is also satisfied that the
significant assumptions used for determining the value of assets
and liabilities have been appropriately scrutinised, challenged and
are sufficiently robust.
The Audit Committee advised the Board that this Annual Report
and Financial Statements, taken as a whole, is fair, balanced and
understandable.
Fraud, Bribery and Corruption
The Audit Committee continues to monitor the fraud, bribery and
corruption policies of the Group. The Board receives a confirmation
from all service providers that there have been no instances of
fraud or bribery.
The Independent External Auditor
BDO Limited served as the Company's Independent Auditor
throughout the year and has indicated its willingness to continue
in office.
The independence and objectivity of the external auditor is
reviewed by the Audit Committee, which also reviews the terms under
which the independent external auditor is appointed to perform
non-audit services. The Audit Committee has established
pre-approval policies and procedures for the engagement of the
auditor to provide non audit services.
The following table summarises the remuneration payable to BDO
Limited for audit and non-audit services provided to the Company
during the year ended 31 March 2023 and the year ended 31 March
2022.
31 March 2023 31 March 2022
GBP GBP
----------------- -------------- --------------
Statutory audit 42,500 37,500
------------------ -------------- --------------
Total fees 42,500 37,500
------------------ -------------- --------------
The following table summarises the remuneration payable to BDO
Italia S.p.A for audit and non-audit services provided to the Group
during the year ended 31 March 2022 and the nine month period ended
31 March 2021.
31 March 2023 31 March 2022
EUR EUR
------------------------------- -------------- --------------
Statutory audit of subsidiary 8,596 8,050
-------------------------------- -------------- --------------
Total fees 8,596 8,050
-------------------------------- -------------- --------------
Performance and Effectiveness
During the period, when considering the effectiveness of the
independent external auditor, the Audit Committee has taken into
account the following factors:
-- the audit plan presented to them before the audit;
-- changes in audit personnel;
-- the post audit findings report;
-- the independent external auditor's own internal procedures to
identify threats to independence; and
-- feedback received from both the Investment Advisor and Administrator.
The Audit Committee reviewed and, where appropriate, challenged
the audit plan and the audit findings report of the independent
external auditor and concluded that the audit plan sufficiently
identified audit risks and that the audit findings report indicated
that the audit risks were sufficiently addressed with no
significant variations from the audit plan. The Audit Committee
considered reports from the independent external auditor on their
procedures to identify threats to independence and concluded that
the procedures were sufficient.
Appointment of External Auditor
Consequent to this review process, the Audit Committee
recommended to the Board that a resolution be put to the next AGM
to confirm the reappointment of BDO Limited as independent external
auditor.
Internal Control and Risk Management Systems
The Board of Directors considers the arrangements for the
provision of Investment Advisory, Investment Management,
Administration and Custody services to the Company on an on-going
basis and a formal review is conducted annually. As part of this
review the Board considered the quality of the personnel assigned
to handle the Company's affairs, the investment process and the
results achieved to date.
The Audit Committee has reviewed the need for an internal audit
function and has decided that the systems and procedures employed
by the Investment Advisor and the Administrator provide sufficient
assurance that a sound system of internal control, which safeguards
the Company's assets, is maintained. An internal audit function
specific to the Group is therefore considered unnecessary.
In finalising the Financial Statements for recommendation to the
Board for approval, the Audit Committee has satisfied itself that
the Financial Statements taken as a whole are fair, balanced and
understandable, and provide the information necessary for
shareholders to assess the Company's performance, business model
and strategy.
A member of the Audit Committee will continue to be available at
each AGM to respond to any shareholder questions on the activities
of the Audit Committee.
R. H. Burke,
Chairman, Audit Committee
4 July 2023
Directors' Remuneration Report
Introduction
An ordinary resolution for the approval of the Director's
Remuneration Report will be put to the shareholders at the
forthcoming AGM held.
Remuneration Policy
All Directors are non-executive and a Remuneration Committee has
not been established. The Board as a whole considers matters
relating to the Directors' remuneration. No advice or services were
provided by any external person in respect of its consideration of
the Directors' remuneration.
The Company's policy is that the fees payable to the Directors
should reflect the time spent by the Directors on the Company's
affairs and the responsibilities borne by the Directors and be
sufficient to attract, retain and motivate directors of a quality
required to run the Company successfully. The Chairman of the Board
is paid a higher fee in recognition of his additional
responsibilities. The policy is to review fee rates periodically,
although such a review will not necessarily result in any changes
to the rates, and account is taken of fees paid to directors of
comparable companies. The Directors of the Company are remunerated
for their services at such a rate as the Directors determine
provided that the aggregate amount of such fees does not exceed
GBP120,000 per annum.
There are no long-term incentive schemes provided by the Company
and no performance fees are paid to Directors.
None of the Directors has a service contract with the Company
but each of the Directors is appointed by a letter of appointment
which sets out the main terms of their appointment. Directors hold
office until they retire by rotation or cease to be a director in
accordance with the Articles of Incorporation, by operation of law
or until they resign.
Remuneration
Directors are remunerated in the form of fees, payable quarterly
in arrears, to the Director personally. No Directors have been paid
additional remuneration outside their normal Directors' fees and
expenses.
The current annual Directors' fees comprise GBP20,000 per annum
payable to the Chairman and GBP15,000 per annum payable to the
other Directors.
Upon appointment of Worsley Associates as Investment Advisor on
31 May 2019, Mr Nixon waived any future Director's fee for as long
as he is a member of the Investment Advisor.
For the year ended 31 March 2023 and the year ended 31 March
2022 Directors' fees incurred were as follows:
For the year For the year ended
ended 31 March 2022
31 March 2023
GBP GBP
--------------------- --------------- -------------------
W. Scott (Chairman) 20,000 20,000
B.A. Nixon - -
R. H. Burke 15,000 15,000
35,000 35,000
--------------------- --------------- -------------------
In addition to the Directors named above, the directors of the
subsidiaries of the Group received emoluments amounting to
GBP11,086 (31 March 2022: GBP10,994). Total fees paid to Directors
and directors of the subsidiaries were GBP46,086 (31 March 2022:
GBP45,994).
Signed on behalf of the Board by:
W. Scott
Director
4 July 2023
Independent Auditor's Report to the Members of Worsley Investors
Limited
Opinion on the financial statements
In our opinion, the financial statements of Worsley Investors
Limited ("the Parent Company") and its subsidiaries ("the
Group"):
-- give a true and fair view of the state of the Group's affairs
as at 31 March 2023 and of its profit for the year then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards as issued by the International
Accounting Standards Board; and
-- have been properly prepared in accordance with the
requirements of the Companies (Guernsey) Law, 2008.
We have audited the financial statements of the Group for the
year ended 31 March 2023 which comprise the Consolidated Statement
of Comprehensive Income, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Financial Position, the
Consolidated Statement of Cash Flows and notes to the financial
statements, including a summary of significant accounting
policies.
The financial reporting framework that has been applied in their
preparation is applicable law and IFRS as issued by the
International Accounting Standards Board.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs(UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion. Our audit opinion is consistent with the
additional report to the audit committee.
Independence
We remain independent of the Group and the Parent Company in
accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's
Ethical Standard as applied to public listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the Directors' assessment of the Group and the
Parent Company's ability to continue to adopt the going concern
basis of accounting included:
-- Obtaining the paper prepared by those charged with governance
and management in respect of going concern and discussing this with
both the Directors and management.
-- Consideration and challenge of the going concern paper and
assessing it for reasonableness, based on our knowledge of the
Group gained throughout the audit.
-- Consideration of the cash available, the liquidity of the
equity portfolio held, and the expected profit generated by the
property holding subsidiary, together with the expected annual
running costs of the Group and determining whether these
assumptions were reasonable based on our knowledge of the
Group.
-- Performing our own sensitivity analysis of the headroom of
the investment portfolio over the annual running expenses.
-- Reviewing the minutes of meetings of those charged with
governance, the RNS announcements and the compliance reports for
any indicators of concerns with respect to going concern.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group's or Parent Company's ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue.
In relation to the Parent Company's reporting on how it has
applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the Directors' statement
in the financial statements about whether the Directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Overview
Key audit matters (2023 Ø Valuation of Investment Property
and 2022)
Ø Valuation & Ownership of Listed
Investments
Materiality Group financial statements as a whole
GBP259,000 (2022: GBP244,000) based
on 1.75% (2022: 1.75%) of total assets.
-----------------------------------------------
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group's system of internal
control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there
was evidence of bias by the Directors that may have represented a
risk of material misstatement.
We carried out a full scope audit of the Group, which was
tailored to take into account the nature of the Group's
investments, the accounting and reporting environment and the
industry in which the Group operates.
In designing our overall audit approach, we determined
materiality and assessed the risk of material misstatement in the
financial statements.
This assessment took into account the likelihood, nature, and
potential magnitude of any misstatement. As part of this risk
assessment, we considered the Group's interaction with the
Investment Advisor and the Administrator. We obtained an
understanding of the control environment in place at the Investment
Advisor and the Administrator to the extent that it was relevant to
our audit. Following this assessment, we applied professional
judgement to determine the extent of testing required over each
balance in the financial statements.
We concluded that the most effective audit approach for the
Group was to audit the consolidated financial statements as if the
Group was one entity.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources
in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Key audit matter How the scope of our audit
addressed the key audit matter
Valuation of The Group holds a single For the independent property
investment property investment property valuation, we evaluated the
which is fair valued. competence and independence
Refer to accounting of the external valuer, which
policies 2(d) The fair value has been included consideration of
and 2(k) and determined by the Directors their qualifications and expertise.
the disclosure based on an independent We read the terms of their
note 7 Royal Institute of Chartered engagement with the Group
Surveyors "RICS" valuation to determine whether there
performed by independent were any matters that might
valuers. have affected their objectivity
or may have imposed scope
Such property valuations limitations upon their work.
are a highly subjective
area as it requires We also read the valuation
the valuer to make judgements report for the property to
on property yields, understand the process undertaken
the quality of the tenant by them and confirmed that
and other variables the valuation was prepared
in order to arrive at in accordance with professional
the current fair value valuation standards and IFRS.
of the property.
We considered the reasonableness
Such subjectivity and of the inputs used by the
judgements are increased valuer in the valuation, such
given the wider economic as the rental terms and other
impacts of inflation, assumptions that impact the
interest rate increases value. This included discussions
and the lower spending with and challenge of the
power of the average valuer around the impact of
consumer. economic variables and, the
resulting adjustments to yields
Any input inaccuracies and overall consideration
or unreasonable bases of the resulting valuation.
used in the valuation In addition, we agreed a sample
judgements (such as of the significant inputs
with respect to the into the valuation, such as
rental value and yield the rental details, to supporting
profile applied) could documentation.
result in a material
misstatement in the
consolidated financial Key observations
statements. Based on the procedures performed,
we did not identify any indications
to suggest that the judgements
made with respect to the property
valuation are unreasonable.
--------------------------------- -------------------------------------
Valuation and The investment portfolio For all investments, we agreed
ownership of as at 31 March 2023 the ownership of the investment
listed investments comprise listed investments portfolio holdings to the
whose price is readily respective independently obtained
Refer to accounting available. Custodian confirmation.
policies 2(n)
and the disclosure The investments represent We tested the valuation of
in note 8 a material proportion all listed investments held
of the net asset value by agreeing the prices used
as disclosed in the in the valuation to independent
Consolidated Statement third-party sources such as
of Financial Position Bloomberg and then recalculating
therefore we consider the price based on the number
this to be a key audit of shares held.
matter.
Key observations
Based on the procedures performed
we did not identify any matters
to indicate that the ownership
and valuation of the investments
are inappropriate.
------------------------------- -------------------------------------
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability
that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent
of testing needed. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole and performance materiality
as follows:
Group financial statements
2023 2022
------------------------- ------------------------
Materiality GBP259,000 GBP244,000
------------------------- ------------------------
Basis for 1.75% of total assets
determining
materiality
---------------------------------------------------
Rationale Due to the entity being an investment fund
for the benchmark with the objective of long-term capital growth,
applied with investment values being a key focus area
for users of the financial statements.
---------------------------------------------------
Performance GBP194,000 GBP170,000
materiality
------------------------- ------------------------
Basis for 75% (2022: 70%) of materiality
determining
performance This was determined using our professional
materiality judgements and took into account the complexity
of the Group and our knowledge of the audit
engagement together with a history of minimal
errors and adjustments.
---------------------------------------------------
Reporting threshold
We agreed with the Audit Committee that we would report to them
all individual audit differences in excess of GBP10,300 (2022:
GBP7,300). We also agreed to report differences below this
threshold that, in our view, warranted reporting on qualitative
grounds.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the Annual
Report and Consolidated Financial Statements, other than the
financial statements and our auditor's report thereon. Our opinion
on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors' statement
in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the Parent
Company's compliance with the provisions of the UK Corporate
Governance Statement specified for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit.
Going concern
and longer-term * The Directors' statement with regards to the
viability appropriateness of adopting the going concern basis
of accounting and any material uncertainties
identified set out above; and
* The Directors' explanation as to its assessment of
the entity's prospects, the period this assessment
covers and why they consider this period is
appropriate set out above.
Other Code
provisions * Directors' statement on fair, balanced and
understandable set out above;
* Board's confirmation that it has carried out a robust
assessment of the emerging and principal risks set
out above;
* The section of the annual report that describes the
review of effectiveness of risk management and
internal control systems set out above; and
* The section describing the work of the audit
committee set out above
----------------------------------------------------------------------
Other Companies (Guernsey) Law, 2008 reporting
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- proper accounting records have not been kept by the Parent Company; or
-- the financial statements are not in agreement with the accounting records; or
-- we have failed to obtain all the information and explanations
which, to the best of our knowledge and belief, are necessary for
the purposes of our audit.
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities
statement within the Report of Directors, the Directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Parent Company's ability to continue
as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Parent Company
or to cease operations, or have no realistic alternative but to do
so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
Based on our understanding of the Group and the industry in
which it operates, we identified that the principal risks of
non-compliance with laws and regulations related to its investment
and property holding activities, and we considered the extent to
which non-compliance might have a material effect on the Group's
financial statements.
We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Parent Company and have a
direct impact on the preparation of the financial statements. We
determined that the most significant frameworks which are directly
relevant to specific assertions in the financial statements are
those that relate to the reporting framework such as IFRS and the
Companies (Guernsey) Law, 2008. We evaluated management's
incentives and opportunities for fraudulent manipulation of the
financial statements (including the risk of management override of
controls)) and determined that the principal risks were related to
management bias and judgement involved in accounting estimates,
specifically in relation to the valuation of the property (the
responses to which are detailed in our key audit matters
above).
We communicated relevant identified laws and regulations and
potential fraud risks to all engagement team members who were all
deemed to have appropriate competence and capabilities and remained
alert to any indications of fraud or non-compliance with laws or
regulations throughout the audit.
Audit procedures performed by the engagement team to respond to
the risks identified included:
Ø Discussion with and enquiry of management and those charged
with governance concerning known or suspected instances of
non-compliance with laws and regulations and fraud;
Ø Obtaining an understanding of the internal control environment
in place to prevent and detect irregularities;
Ø Reading minutes of meetings of those charged with governance,
correspondence with the Guernsey Financial Services Commission,
internal compliance reports, complaint registers and breach
registers to identify and consider any known or suspected instances
of non-compliance with laws and regulations or fraud; and
Ø Maintaining professional scepticism for any unusual accounting
practices or inadequate support for underlying transactions
recognised during the year. Challenging material differences
arising from testing to ensure appropriate explained or
supported.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further
removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities is available on
the Financial Reporting Council's website at:
https://www.frc.org.uk/auditorsresponsibilities . This description
forms part of our auditor's report.
The engagement director on the audit resulting in this
independent auditor's opinion is Justin Hallett.
Use of our report
This report is made solely to the Parent Company's members, as a
body, in accordance with Section 262 of the Companies (Guernsey)
Law, 2008. Our audit work has been undertaken so that we might
state to the Parent Company's members those matters we are required
to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the
Parent Company's members, as a body, for our audit work, for this
report, or for the opinions we have formed.
For and on behalf of BDO Limited
Chartered Accountants and Recognised Auditor
Place du Pré
Rue du Pré
St Peter Port
Guernsey
4 July 2023
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2023
For the For the
year ended year ended
31 March 2023 31 March 2022
Notes GBP000s GBP000s
------------------------------------------ ------ -------------- --------------
Gross property income 4 769 742
Property operating expenses 4 (148) (144)
Net property income 621 598
Other income 52 6
Net gain on investments at fair
value through profit or loss 8 1,765 102
Unrealised valuation loss on investment
property 7 (789) (722)
General and administrative expenses 5 (528) (530)
Profit/(loss) before tax 1,121 (546)
------------------------------------------ ------ -------------- --------------
Income tax (expense)/refund 11 (90) 41
------------------------------------------ ------ -------------- --------------
Profit/(loss)/profit for the
year 1,031 (505)
------------------------------------------ ------ -------------- --------------
Other comprehensive gain/(loss)
Foreign exchange translation gain/(loss) 322 (48)
------------------------------------------ ------ -------------- --------------
Total items that are or may be
reclassified from/(to) profit
or loss 322 (48)
------------------------------------------ ------ -------------- --------------
Total comprehensive income/(loss)
for the year 1,353 (553)
------------------------------------------ ------ -------------- --------------
Basic and diluted earnings/(loss)
per ordinary share (pence) 6 3.06 (1.50)
The accompanying notes form an integral part of these Financial
Statements
Consolidated Statement of Changes in Equity
For the year ended 31 March 2023
Foreign
Revenue Distributable currency Total
reserve reserve reserve equity
Note GBP000s GBP000s GBP000s GBP000s
-------------------------- ------ --------- -------------- ---------- --------
Balance at 1 April 2021 (44,972) 47,263 11,728 14,019
Loss for the year (505) - - (505)
Other comprehensive loss - - (48) (48)
Balance at 31 March 2022 (45,477) 47,263 11,680 13,466
---------------------------------- --------- -------------- ---------- --------
Balance at 1 April 2022 (45,477) 47,263 11,680 13,466
Profit for the year 1,031 - - 1,031
Other comprehensive income - - 322 322
Balance at 31 March 2023 (44,446) 47,263 12,002 14,819
----------------------------- --------- ------- ------- -------
The accompanying notes form an integral part of these Financial
Statements
Consolidated Statement of Financial Position
As at 31 March 2023
31 March 31 March
2023 2022
Notes GBP000s GBP000s
---------------------------------------- ------ ----------- -----------
Non-current assets
Investment property 7 6,033 6,550
Lease incentive 7 737 778
Current assets
Cash and cash equivalents 541 576
Investments held at fair value through
profit or loss 8 7,839 5,973
Trade and other receivables 9 54 34
Tax receivable 29 52
Total assets 15,233 13,963
---------------------------------------- ------ ----------- -----------
Non-current liabilities
Deferred tax payable 11 75 72
Current liabilities
Trade and other payables 10 178 254
Tax payable 161 171
Total liabilities 414 497
---------------------------------------- ------ ----------- -----------
Total net assets 14,819 13,466
---------------------------------------- ------ ----------- -----------
Equity
Revenue reserve 15 (44,446) (45,477)
Distributable reserve 15 47,263 47,263
Foreign currency reserve 15 12,002 11,680
Total equity 14,819 13,466
---------------------------------------- ------ ----------- -----------
Number of ordinary shares 12 33,740,929 33,740,929
Net asset value per ordinary share
(pence) 13 43.92 39.91
---------------------------------------- ------ ----------- -----------
The Consolidated Financial Statements were approved by the Board
of Directors and authorised for issue on 4 July 2023. They were
signed on its behalf by:-
W. Scott
Director
The accompanying notes form an integral part of these Financial
Statements
Consolidated Statement of Cash Flows
For the year ended 31 March 2023
For the For the
year ended year ended
31 March 2023 31 March 2022
Notes GBP000s GBP000s
--------------------------------------- ------ -------------- --------------
Operating activities
Profit/(loss)/profit before tax 1,121 (546)
Adjustments for:
Unrealised valuation loss on
investment property 7 862 770
Net gains on investments held
at fair value through profit
or loss 8 (1,765) (102)
Investment income 8 559 217
(Increase)/decrease in trade
and other receivables (52) 172
Decrease in provisions - (42)
(Decrease)/increase in trade
and other payables (76) 87
Purchase of investments held
at fair value through profit
or loss 8 (1,223) (868)
Proceeds on sale of investments
held at fair value through profit
or loss 8 563 283
Net cash used in operations (11) (29)
--------------------------------------- ------ -------------- --------------
Tax (paid)/received (74) 103
Net (outflow)/inflow from operating
activities (85) 74
--------------------------------------- ------ -------------- --------------
Effects of exchange rate fluctuations 50 16
--------------------------------------- ------ -------------- --------------
(Decrease)/increase in cash
and cash equivalents (35) 90
--------------------------------------- ------ -------------- --------------
Cash and cash equivalents at
start of the year 576 486
--------------------------------------- ------ -------------- --------------
Cash and cash equivalents at
the year end 541 576
--------------------------------------- ------ -------------- --------------
The accompanying notes form an integral part of these Financial
Statements
worsley investors Limited
Notes to the Consolidated Financial Statements
For the year ended 31 March 2023
1. Operations
Worsley Investors Limited (the "Company") is a limited
liability, closed-ended investment company incorporated in
Guernsey. The Company historically invested in commercial property
in Europe and that was held through subsidiaries. The Company's
current investment objective is to provide Shareholders with an
attractive level of absolute long-term return, principally through
the capital appreciation and exit of undervalued securities. The
existing real estate asset of the Company will be realised in an
orderly manner, that is with a view to optimising the disposal
value of such asset.
The Consolidated Financial Statements (the "Financial
Statements") of the Company for the year ended 31 March 2023
comprise the Financial Statements of the Company and its
subsidiaries (together referred to as the "Group").
Please refer to the Investment Policy below. The Company's
registered office is included below.
2. Significant accounting policies
(a) Basis of preparation
The Financial Statements, which show a true and fair view, have
been prepared in accordance with International Financial Reporting
Standards ("IFRS") which comprise standards and interpretations
issued by the International Accounting Standards Board ("IASB") and
are in compliance with the Companies (Guernsey) Law, 2008. The
Financial Statements have been prepared on a going concern basis,
and the accounting policies, presentation and methods of
computation are consistent with this basis, as disclosed in the
going concern paragraph below.
The Directors believe that the Financial Statements contain all
of the information required to enable shareholders and potential
investors to make an informed appraisal of the investment
activities and profits and losses of the Group for the period to
which they relate and do not omit any matter or development of
significance.
(b) Going concern
These Financial Statements have been prepared on a going concern
basis. The Directors, at the time of approving the Financial
Statements, have a reasonable expectation that the Group has
adequate resources to continue in operational existence for a
period of at least twelve months from the date of approval of these
Financial Statements. The Group maintains a significant cash
balance and an extensive portfolio of securities, and the property
lease generates sufficient cash flows to pay on-going expenses and
other obligations. The Directors have considered the cash position
and performance of the current capital invested by the Group, the
potential impact on markets and supply chains of geo-political
risks such as the current crisis in Ukraine and continuing
macro-economic factors and inflation and concluded that it is
appropriate to adopt the going concern basis in the preparation of
these Consolidated Financial Statements.
Going concern is assessed from 12 months from the approval of
these Consolidated Financial Statements. Owing to the fact that the
Group currently has no borrowing, has a significant cash holding
and that the Company's equity investments predominantly comprise
readily realisable securities the Board considers there to be no
material uncertainty.
(c) Adoption of new standards and its consequential amendments
New Accounting Standards interpretations and amendments adopted
in the reporting period
The were no relevant new standards, interpretations or
amendments which had a material impact on the Financial Statements
of the Company.
New Accounting Standards and interpretations applicable to
future reporting periods
At the date of approval of these Financial Statements, the
following relevant standards and interpretations, which have not
been applied in these Financial Statements, were in issue but not
yet effective:
-- IAS 1 (amended), "Presentation of Financial Statements"
(amendments regarding the classification of liabilities, effective
for periods commencing on or after 1 January 2023).
-- Amendments to IAS 1 Classification of Liabilities as Current
or Non-current (effective for periods commencing on or after 1
January 2023) - The amendments in Classification of Liabilities as
Current or Non-current clarify how to classify debt and other
liabilities as current or non-current.
-- Amendments to IAS 1 Disclosure of Accounting Policies
(effective for periods commencing on or after 1 January 2023) - The
amendments in Disclosure of Accounting Policies require companies
to disclose their material accounting policy information rather
than their significant accounting policies.
-- Amendments to IAS 8 Definition of Accounting Estimates
(effective for periods commencing on or after 1 January 2023) - The
amendments in Definition of Accounting Estimates clarify how
companies should distinguish changes in accounting policies from
changes in accounting estimates, by replacing the definition of a
change in accounting estimates with a new definition.
Any standards that are deemed not relevant to the operations of
the Group have been excluded. The Directors expect that the
adoption of these amended standards in a future period will not
have a material impact on the Financial Statements of the
Group.
(d) Significant estimates and judgements
The preparation of the Group's Financial Statements requires
management to make judgements, estimates and assumptions which
affect the reported amounts of revenues, expenses, assets and
liabilities, and the accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these assumptions and
estimates could result in outcomes which require a material
adjustment to the carrying amount of assets or liabilities affected
in future periods.
(i) Judgements:
In the process of applying the Group's accounting policies,
management made no judgements which had an effect on the amounts
recognised in the Financial Statements.
(ii) Estimates and assumptions:
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, which have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are described below. The Group based its assumptions and estimates
on parameters available when the Financial Statements were
prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or
circumstances arising which are beyond the control of the Group.
Such changes are reflected in the assumptions when they occur.
Revaluation of investment property
The Group carries its investment property at fair value, with
changes in fair value being recognised in the Consolidated
Statement of Comprehensive Income. The property is valued quarterly
by an external independent valuer as at the end of each calendar
quarter. Their valuations are reviewed quarterly by the Board.
Quarterly valuations of the investment property are carried out
by Knight Frank LLP, external independent valuers to the Group, in
accordance with the Royal Institution of Chartered Surveyors'
("RICS") Appraisal and Valuation Standards. The property has been
valued in accordance with the definition of the RICS Valuation
which is defined as the price which would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The valuation
is based on the highest and best use of the investment
property.
The key assumptions used to determine the market value of the
investment property are explained further in note 7.
(e) Foreign currency translation
Functional currency
The Company's functional currency is pounds sterling and the
subsidiaries' functional currency is Euro. The Board of Directors
considers that the Parent Company's functional currency is pounds
sterling, as the capital raised, return on capital and any
distributions paid by the Parent Company are in pounds sterling.
The Euro most faithfully represents the economic effect of the
underlying transactions, events and conditions of the subsidiaries.
The Euro is the currency in which the subsidiaries measure their
performance and report their results.
Foreign currency transactions
Transactions in foreign currencies are translated to
presentation currency at the spot foreign exchange rate ruling at
the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the Consolidated Statement of
Financial Position date are translated to presentation currency at
the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the
Consolidated Statement of Comprehensive Income. Non-monetary assets
and liabilities which are measured at historical cost in a foreign
currency are translated using the exchange rate at the date of the
original transaction. Non-monetary assets and liabilities
denominated in foreign currencies which are stated at fair value
are translated to presentation currency at foreign exchange rates
ruling at the dates the fair value was determined.
Exchange differences on foreign operations
The assets and liabilities of foreign operations, arising on
consolidation, are translated to presentation currency at the
foreign exchange rates ruling at the Consolidated Statement of
Financial Position date. The income and expenses of foreign
operations are translated to presentation currency at an average
rate where this is considered reasonably to represent the foreign
exchange rate for the period. Foreign exchange differences arising
on retranslation are recognised in other comprehensive income and
as a separate component of equity.
(f) Basis of consolidation
(i) Subsidiaries
The Financial Statements comprise the Financial Statements of
the Company and its subsidiaries as at 31 March each year.
Subsidiaries are fully consolidated from the date of acquisition,
being the date on which the Group obtains control, and continue to
be consolidated until the date when such control ceases. The
Financial Statements of the subsidiaries are prepared using
consistent accounting policies.
(ii) Transactions eliminated on consolidation
All intra-group balances, transactions and unrealised gains and
losses resulting from intra-group transactions are eliminated in
preparing the Financial Statements.
Worsley Investors Limited, the Company, is the parent of the
Group. It was incorporated in Guernsey on 5 April 2005. The Company
owned the following subsidiary as at the reporting date:
Subsidiaries Country Date of Ownership Principal Financial
of incorporation incorporation interest activities year end
%
Property Trust Luxembourg 24 November 100.00% Holding 31 March
Luxembourg 2 S.à 2005 Company
r.l.
------------------ --------------- ---------- ------------ ----------
The company shown in the table below was directly owned by
Property Trust Luxembourg 2 S.à.r.l. as at the reporting date:
Indirect subsidiaries and joint Country Ownership Financial
ventures of incorporation interest year end
Property Trust Luxembourg 2 S.à %
r.l.
------------------
Multiplex 1 S.r.l. Italy 100.00% 31 December
-------------------------------------- ------------------ ---------- ------------
Multiplex 1 S.r.l. has a reporting date of 31 December owing to
legacy set up.
(g) Income recognition
Gross property income is rental income from the investment
property leased out under operating leases and is recognised in the
Consolidated Statement of Comprehensive Income on a straight-line
basis over the term of the lease. Lease incentives are amortised
over the whole lease term.
Dividend income from equity investments is recognised when the
relevant investment is quoted ex-dividend, and is included gross of
withholding tax.
Interest income from banks is recognised on an effective yield
basis. Bond interest is recognised using the effective interest
rate method.
(h) Expenses/other Income
Expenses are accounted for on an accruals basis.
Service costs for service contracts entered into by the Group
acting as the principal are recorded when such services are
rendered.
(i) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits carried at amortised cost. Cash equivalents are
short-term, highly liquid investments which are readily convertible
to known amounts of cash and which are subject to an insignificant
risk of changes in value.
Purchases and sales of investments are considered to be
operating activities of the Company, given its purpose, rather than
investing activities. The cash flows arising from these activities
are shown in the Consolidated Statement of Cash Flows as operating
activities.
(j) Provisions
A provision is recognised in the Consolidated Statement of
Financial Position when the Group has a legal or constructive
obligation as a result of a past event, and it is probable that an
outflow of economic benefits will be required to settle the
obligation.
(k) Investment property
Investment property is held to earn rental income and capital
appreciation and is recognised as such. Investment property is
initially recognised at cost, being the fair value of consideration
given, including associated transaction costs.
After initial recognition, investment property is measured at
fair value using the fair value model with unrealised gains and
losses recognised in the Consolidated Statement of Comprehensive
Income. Realised gains and losses upon disposal of the property are
recognised in the Consolidated Statement of Comprehensive Income.
Quarterly valuations are carried out by Knight Frank LLP, external
independent valuers, in accordance with the RICS Appraisal and
Valuation Standards. The property has been valued in accordance
with the definition of the RICS Valuation which is defined as the
price which would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants
at the measurement date. The valuation is based on the highest and
best use of the investment property.
Lease incentive assets are deducted from the independent
valuation to arrive at fair value for accounting purposes: refer to
note 7 for further details.
Subsequent expenditure is charged to the asset's carrying amount
only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can
be measured reliably. All other repairs and maintenance costs are
charged to the Consolidated Statement of Comprehensive Income
during the financial period in which they are incurred.
Investment property is derecognised when it has been disposed
of. Where the Group disposes of a property at fair value in an
arm's length transaction, the carrying value immediately prior to
the sale is adjusted to the transaction price, and the adjustment
is recorded in the income statement within gain/(loss) on disposals
of subsidiaries and investment property.
(l) Assets held for sale
Investment property is transferred to assets held for sale when
it is expected that the carrying amount will be recovered
principally through sale rather than from continuing use. For this
to be the case, the property must be available for immediate sale
in its present condition subject only to terms that are usual and
customary for sales of such property and its sale must be highly
probable.
For the sale to be highly probable:
-- The Board must be committed to a plan to sell the property
and an active programme to locate a buyer and complete the plan
must have been initiated;
-- The property must be actively marketed for sale at a price
that is reasonable in relation to its current fair value; and
-- The sale should be expected to qualify for recognition as a
completed sale within one year from the date of classification.
On re-classification, any investment property which is measured
at fair value would continue to be so measured.
(m) Operating leases (lessor)
The determination of whether or not an arrangement is, or
contains, a lease is based on the substance of the arrangement at
the inception date. The arrangement is assessed to establish if
fulfilment of the arrangement is dependent on the use of a specific
asset or assets or the arrangement conveys a right to use the asset
or assets, even if that right is not explicitly specified in an
arrangement.
Leases in which the Group does not transfer substantially all
the risks and benefits of ownership of an asset are classified as
operating leases. Initial direct costs incurred in negotiating an
operating lease are added to the carrying amount of the leased
asset and recognised over the lease term on the same basis as
rental income. Contingent rents are recognised as revenue in the
period in which they are earned. Where an operating lease is
modified it is accounted for as a new lease with any prepaid or
accrued lease payments relating to the original lease being treated
as part of the lease payments for the new lease.
(n) Financial instruments
Financial assets and financial liabilities are recognised in the
Consolidated Statement of Financial Position when the Group becomes
a party to the contractual provisions of the instrument. Financial
assets and financial liabilities are only offset and the net amount
reported in the Consolidated Statement of Financial Position and
Consolidated Statement of Comprehensive Income when there is a
currently enforceable legal right to offset the recognised amounts
and the Group intends to settle on a net basis or realise the asset
and liability simultaneously.
On initial recognition, the Group classifies financial assets as
measured at amortised cost or at fair value through profit or loss
("FVTPL").
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
-- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
-- its contractual terms give rise on specified dates to cash
flows which are solely payments of principal and interest.
In making an assessment of the objective of the business model
in which a financial asset is held, the Group considers all of the
relevant information about how the business is managed.
The Group has determined that it has two business models:
Held-to-collect business model: this includes cash and cash
equivalents and other receivables. These financial assets are held
to collect contractual cash flow.
Other business model: this includes investments in listed
equities and investment funds. These financial assets are managed
and their performance is evaluated, on a fair value basis, with
sales taking place routinely.
Impairment
The Group assesses on a forward-looking basis the expected
credit loss associated with its financial assets held at amortised
cost. The Group has elected to apply the simplified approach
permitted by IFRS 9 in respect of receivables because they have a
maturity of less than one year and do not contain a significant
financing component. Under the simplified approach the requirement
is always to recognise lifetime Expected Credit Loss ("ECL"). Under
the simplified approach practical expedients are available to
measure lifetime ECL but forward-looking information must still be
incorporated. Under the simplified approach there is no need to
monitor significant increases in credit risk and entities will be
required to measure lifetime ECLs at all times. The Directors have
concluded that any ECL on receivables would be immaterial to the
Financial Statements owing to the low credit risk of the relevant
counterparties and the historical payment history.
A receivable is considered to be in "default" when the
corresponding party is unlikely to pay its credit obligations in
full, without recourse to actions such as realising security (if
held), or the borrower is past due more than 90 days on any
material credit obligation.
Investments at fair value through profit or loss
("investments")
Recognition
Investments are recognised in the Company's Statement of
Financial Position when the Company becomes a party to the
contractual provisions of the instrument.
Purchases and sales of investments are recognised on the trade
date (the date on which the Company commits to purchase or sell the
investment). Investments purchased are initially recorded at fair
value, being the consideration given, including transaction or
other dealing costs associated with the investment.
Measurement
Subsequent to initial recognition, investments are measured at
fair value. Gains and losses arising from changes in the fair value
of investments and gains and losses on investments that are sold
are recognised through profit or loss in the Consolidated Statement
of Comprehensive Income within net changes in fair value of
financial assets at fair value through profit or loss.
Investments traded in active markets are valued at the latest
available bid prices ruling at midnight on the reporting date. The
Directors are of the opinion that the bid-market prices are the
best estimate of fair value. Investments consist of listed or
quoted equities or equity-related securities, options and bonds
which are issued by corporate issuers, supra-nationals or
government organisations, and investment in funds.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Gains and losses
arising from changes in the fair value of financial
assets/(liabilities) are shown as net gains or losses on financial
assets through profit or loss and recognised in the Consolidated
Statement of Comprehensive Income in capital in the period in which
they arise.
Realised gains and losses arising on disposal of investments are
calculated by reference to the proceeds received on disposal and
the average cost attributable to those investments and are
recognised in the Consolidated Statement of Comprehensive Income.
Unrealised gains and losses on investments are recognised in the
Consolidated Statement of Comprehensive Income.
Capital
Financial instruments issued by the Group are treated as equity
if the holder has only a residual interest in the assets of the
Group after the deduction of all liabilities. The Company's
Ordinary Shares are classified as equity instruments.
The Group's capital is represented by the Ordinary Shares,
revenue reserve, distributable reserve and foreign exchange
reserve. Share premium is included in the distributable reserve
presented in the Consolidated Statement of Changes in Equity. The
capital of the Company is managed in accordance with its investment
policy in pursuit of its investment objective, both of which are
set out below. It is not subject to externally imposed capital
requirements. The Ordinary shares carry rights regarding dividends,
voting, winding-up and redemptions, which are detailed in full in
the Company's Memorandum and Articles of Incorporation.
(o) Taxation
The Company has obtained exempt company status in Guernsey under
the terms of the Income Tax (Exempt Bodies) (Guernsey) Ordinance,
1989 and accordingly is subject to an annual fee of GBP1,200. The
Directors intend to conduct the Group's affairs such that it
continues to remain eligible for exemption.
The Company's subsidiaries are subject to income tax on any
income arising on investment property, after deduction of debt
financing costs and other allowable expenses. However, when a
subsidiary owns a property located in a country other than its
country of residence the taxation of the income is defined in
accordance with the double taxation treaty signed between the
country where the property is located and the residence country of
the subsidiary.
Income tax on the profit or loss for the period comprises
current and deferred tax. Current tax is the expected tax payable
on the taxable income for the year as determined under local tax
law, using tax rates enacted or substantially enacted at the
Consolidated Statement of Financial Position date, and any
adjustment to tax payable in respect of previous periods.
Deferred income tax is provided using the liability method,
providing for temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amount used for taxation purposes. The amount of deferred tax
provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantially enacted at the Consolidated
Statement of Financial Position date, except in the case of
investment property, where deferred tax is provided for the effect
of the sale of the property. Deferred tax assets are recognised
only to the extent that it is probable that future taxable profits
will be available against which the asset is utilised.
Details of current tax and deferred tax assets and liabilities
are disclosed in note 11.
(q) Determination and presentation of operating segments
The Company has entered into an Investment Advisory Agreement
with the Investment Advisor, under which the Board has appointed
the Investment Advisor to oversee on a day-to-day basis the assets
of the Company, subject to their review and control and ultimately
the overall supervision of the Board. The Board retains full
responsibility to ensure that the Investment Advisor adheres to its
mandate. Moreover, the Board is fully responsible for the
appointment and/or removal of the Investment Advisor. Accordingly,
the Board is deemed to be the "Chief Operating Decision Maker" of
the Company.
The Board has considered the requirements of IFRS 8, 'Operating
Segments'. The Board is of the view that the Group has two segments
of business (see note 18).
(r) Share issue costs
Share issue costs are fully written off against the share
capital account in the period of the share issue in accordance with
Guernsey company law.
3. Material agreements
Investment Management Agreements
Worsley Associates LLP
The Investment Advisory Agreement had an initial term of two
years, with either Worsley Associates LLP or the Company being able
to terminate the agreement by giving 12 months' notice from 1 June
2020 and thereafter on a rolling 12 months' notice basis. On giving
the requisite 12 months' notice there is no compensation on
termination (save in respect of any payment made in lieu of notice
where Worsley Associates and the Company agree to terminate the
Investment Advisory Agreement on less than 12 months' notice). In
addition, the Company and Worsley Associates may terminate the
Investment Advisory Agreement in certain limited circumstances.
Pursuant to the Investment Advisory Agreement, Worsley
Associates is entitled to an annual advisory fee of 1.25 per cent.
of the Company's Net Asset Value, to the extent that the Company's
Net Asset Value is GBP40 million or less, but subject to a minimum
fee of GBP150,000 per annum. If the Company's Net Asset Value
exceeds GBP40 million, the Company will pay Worsley Associates a
fee equal to 1.25 per cent. of GBP40 million and 1.00 per cent. of
the amount by which the Company's Net Asset Value exceeds GBP40
million.
In accordance with an addendum to the Investment Advisory
Agreement entered into during the year, with effect from 1 October
2022 the Company agreed that it would reimburse Worsley Associates
for the costs it incurs using the FactSet financial market
information system for dealing and research on behalf of the
Company.
During the year, the Worsley Associates was due an Investment
Advisory fee of GBP173,713 (31 March 2022: GBP181,628). Fees of
GBP15,277 were outstanding as at 31 March 2023 (31 March 2022:
GBP16,841).
Broker Agreement
Shore Capital and Corporate Limited and Shore Capital
Stockbrokers Limited
On 18 April 2019, Shore Capital and Corporate Limited and Shore
Capital Stockbrokers Limited (together "Shore Capital") were
appointed as the Company's financial adviser and broker. Fees
expensed in the year ended 31 March 2023 totalled GBP25,000 (31
March 2022 GBP25,730) of which none was outstanding as at 31 March
2023 (31 March 2022: GBPnil).
Administrator Agreement
On 4 August 2022, the entire share capital of Sanne Group Plc,
the ultimate parent company of Sanne Fund Services (Guernsey)
Limited ("Sanne"), the Administrator, was acquired by Apex
Acquisition Company Limited, a wholly owned subsidiary of Apex
Group Limited
With effect from 28 June 2019, Sanne has been entitled to an
annual fee payable by the Company as follows:
-Where the Net Asset Value ("NAV") is up to GBP20 million a
fixed fee of GBP70,000 per annum applies. This fee is subject to
annual adjustment for inflation;
-Where the NAV is over GBP20 million but up to GBP100 million a
further fee equating to 0.025% of NAV per annum will be charged on
the excess; and
-Where the NAV is over GBP100 million, a further fee equating to
0.06% per annum of the NAV in excess of GBP100 million will be
charged.
During the year, Sanne was due an administration fee of
GBP76,921 (31 March 2022: GBP72,869) of which GBP19,054 was
outstanding as at 31 March 2023 (31 March 2022: GBP19,000).
Fees totalling GBP36,890 were also paid to the administrators of
the subsidiaries (31 March 2022: GBP45,912).
Custody Agreement
With effect from 5 July 2019, Butterfield Bank (Guernsey)
Limited was appointed as Custody Agent to the Company. Butterfield
Bank (Guernsey) Limited is entitled to an annual fee payable by the
Company at the rate of 0.1% per annum of the gross value of the
investments held, subject to a minimum fee of GBP400 per annum.
During the year, Butterfield Bank (Guernsey) Limited was due a
custody agency fee of GBP2,845 (31 March 2022: GBP9,309). The fee
for the year included a refund of previously overcharged fees of
GBP5,869. Fees of GBP1,952 were outstanding as at 31 March 2023 (31
March 2022: GBP2,300).
During the year, Butterfield Bank (Guernsey) Limited was due
transaction fees of GBP1,775 incurred as a result of investment
trading (31 March 2022: GBP1,571). No transaction fees were
outstanding as at 31 March 2023 (31 March 2022: GBPnil).
4. Gross property income
Gross rental income for the year ended 31 March 2023 amounted to
GBP0.77 million (31 March 2022: GBP0.74 million). The Group leases
out its investment property under an operating lease which is
structured in accordance with local practices in Italy. The lease
benefits from indexation.
The current lease was originally signed in December 2018, but
after negotiations necessitated by COVID-19 a lease amendment was
signed on 11 September 2020. The ongoing lease terms are summarised
as follows:
- Term
17.5 years fixed, from 1 January 2019 until 30 June 2035 with an
automatic nine-year extension unless cancelled by the tenant with a
minimum 12-month notice period.
- Base Rent
From 1 March 2021 to 31 December 2021 - EUR915,000, and from 1
January 2022 indexed to 100% of the ISTAT Consumer Index on an
upwards-only basis. On 1 January 2022 annual rental increased to
EUR949,770 and on 1 January 2023 annual rental increased to
EUR1,057,094. Please refer to the table below and note 7 for
further details.
- Variable Rent
There will be an incremental rent of between EUR1.50 and EUR2.50
per ticket sold above a minimum threshold of 350,000 tickets per
calendar year. There was no variable rent earned in the year ended
31 March 2023 (31 March 2022: none).
Minimum Lease Payments (based on actual cash flows)
31 March 2023 31 March 2022
EUR000s EUR 000s
--------------- -------------- --------------
1 year 1,057 950
1-5 years 4,252 3,820
After 5 years 7,793 7,976
----------------- -------------- --------------
Lease incentive
Year ended Year ended
31 March 2023 31 March 2022
GBP000s GBP000s
Lease incentive at beginning of year 778 834
Lease incentive movement for the year (73) (48)
Foreign exchange translation 32 (8)
Lease incentive at end of year 737 778
--------------------------------------- -------------- --------------
The amounts recognised in the Consolidated Statement of
Comprehensive Income of the Group in relation to the investment
property are as follows:
Rental income
Year ended Year ended
31 March 2023 31 March 2022
GBP000s GBP000s
----------------------------------------- --------------- ---------------
Base rent received 842 790
Variable rent - -
Straight lining of lease incentives (73) (48)
----------------------------------------- --------------- -----------------
Rental income (net of lease incentives) 769 742
----------------------------------------- --------------- ---------------
In previous years rental income and lease incentives were shown
separately in the Consolidated Statement of Comprehensive Income
but this year it has been changed to combine both items to better
reflect IFRS16.
Expense from services to tenants, other property operating and
administrative expenses
Year ended
31 March Year ended
2023 31 March 2022
GBP000s GBP000s
------------------------------------------- ----------- ---------------
Property expenses arising from investment
property which generates rental income 148 144
------------------------------------------- ----------- ---------------
Total property operating expenses 148 144
------------------------------------------- ----------- ---------------
As the investment property was rented for the entire year, there
were no p roperty expenses arising from investment property which
did not generate rental income.
5. General and administrative expenses
Year ended Year ended
31 March 31 March
2023 2022
GBP000s GBP000s
------------------------------------ ----------- -----------
Administration fees (note 3) 113 119
General expenses 73 58
Audit fees 49 44
Legal and professional fees 20 29
Directors' fees and expenses (note
16) 46 46
Insurance fees 28 26
Corporate Broker fees (note 3) 25 26
Investment Advisor fees (note 3
& 16) 174 182
Total 528 530
------------------------------------- ----------- -----------
6. Basic and diluted earnings/(loss) per Share
The basic and diluted earnings or loss per share for the Group
is based on the net profit for the year of GBP1.031 million (31
March 2022: net loss of GBP0.505 million) and the weighted average
number of Ordinary Shares in issue during the year of 33,740,929
(31 March 2022: 33,740,929). There are no instruments in issue
which could potentially dilute earnings or loss per Ordinary
Share.
7. Investment property
Year ended
Year ended 31 March
31 March 2023 2022
GBP000s GBP000s
Value of investment property before
lease incentive adjustment
at beginning of the year 7,328 8,170
Fair value adjustment (862) (770)
Foreign exchange translation 304 (72)
Independent external valuation 6,770 7,328
Adjusted for: Lease incentive (note 4)* (737) (778)
Fair value of investment property at
the end of the year 6,033 6,550
------------------------------------------------ --------------- -----------
Fair value adjustment on property (862) (770)
Adjustment to fair value for lease
incentive movement 73 48
Total unrealised investment loss on
investment property (789) (722)
------------------------------------------------ --------------- -----------
* The Lease incentive is separately classified as a non-current
asset within the Consolidated Statement of Financial Position and
to avoid double counting is hence deducted from the independent
property valuation to arrive at fair value for accounting purposes.
In previous years fair value movement on the investment property
and movement in lease incentives were shown separately in the
Consolidated Statement of Comprehensive income but this year it has
been changed to assist readers' understanding of the Financial
Statements.
The property is carried at fair value. The lease incentive
granted to the tenant is amortised over the term of the lease. In
accordance with IFRS, the external independent valuation is reduced
by the carrying amount of the lease incentive as at the valuation
date. Quarterly valuations are carried out at 31 March, 30 June, 30
September and 31 December by Knight Frank LLP, external independent
valuers.
The resultant fair value of investment property is analysed
below by valuation method, according to the levels of the fair
value hierarchy. The different levels have been defined as
follows:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
which are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability which are not based
on observable market data (unobservable inputs).
The investment property (Curno) is classified as Level 3.
The significant assumptions made relating to its independent
valuation are set out below:
Significant assumptions 31 March 2023 31 March 2022
Gross estimated rental value per sqm p.a. 114.00EUR 114.00EUR
Equivalent yield 12.97% 9.10%
-------------- --------------
The external valuer has carried out its valuation using the
comparative and investment methods. The assessment was made on the
basis of a collation and analysis of appropriate comparable
investment and rental transactions. The market analysis has been
undertaken using market knowledge, enquiries of other agents,
searches of property databases, as appropriate and any information
provided to them. The external valuer has adhered to the RICS
Valuation - Professional Standards.
An increase/decrease in ERV (Estimated Rental Value) will
increase/decrease valuations, while an increase/decrease to yield
decreases/increases valuations. The information below sets out the
sensitivity of the independent property valuation to changes in
Fair Value.
If market rental increases by 10% then property value increases
by 1.85%, being EUR142,817 (31 March 2022: 2.41%, being
EUR210,484).
If market rental decreases by 10% then property value decreases
by 1.85% being EUR142,817 (31 March 2022: 2.41%, being
EUR210,484)
If yield increases by 1% then property value decreases by 5.91%,
being EUR456,044 (31 March 2022: 8.36%, being EUR728,913)
If yield decreases by 1% then property value increases by 6.89%,
being EUR532,021 (31 March 2022: 10.06%, being EUR877,169)
Property assets are inherently difficult to value due to the
individual nature of each property. As a result, valuations are
subject to uncertainty. There is no assurance that estimates
resulting from the valuation process will reflect the actual sales
price even where a sale occurs shortly after the valuation date.
Rental income and the market value for properties are generally
affected by overall conditions in the local economy, such as growth
in Gross Domestic Product ("GDP"), employment trends, inflation and
changes in interest rates. Changes in GDP may also impact
employment levels, which in turn may impact the demand for
premises. Furthermore, movements in interest rates may affect the
cost of financing for real estate companies.
Both rental income and property values may be affected by other
factors specific to the real estate market, such as competition
from other property owners, the perceptions of prospective tenants
of the attractiveness, convenience and safety of properties, the
inability to collect rents because of the bankruptcy or the
insolvency of tenants, the periodic need to renovate, repair and
release space and the costs thereof, the costs of maintenance and
insurance, and increased operating costs. The Investment Advisor
addresses market risk through a selective investment process,
credit evaluations of tenants, ongoing monitoring of tenants and
through effective management of the property.
8. Investments at fair value through profit or loss
Year ended Year ended
31 March 2023 31 March 2022
GBP000s GBP000s
--------------------------------------------------------------- --------------- ---------------
Fair value of investments at FVTPL at beginning of year 5,973 5,504
Purchases 1,223 867
Sales (563) (283)
Realised gains 264 46
Unrealised gains/(losses) 942 (161)
--------------------------------------------------------------- --------------- ---------------
Total investments at FVTPL 7,839 5,973
--------------------------------------------------------------- --------------- ---------------
As at 31 March 2023, the cost of the Investments at FVTPL was
GBP4.908million (31 March 2022: GBP3.983million).
Year ended Year ended
31 March 2023 31 March 2022
GBP000s GBP000s
----------------------------------------- --------------- ---------------
Realised gains 264 46
Unrealised gains/(losses) 942 (161)
Investment income 559 217
----------------------------------------- --------------- ---------------
Net gains on investments at FVTPL 1,765 102
----------------------------------------- --------------- ---------------
The fair value of investments at FVTPL are analysed below by
valuation method, according to the levels of the fair value
hierarchy. The different levels have been defined as follows:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
which are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability which are not based
on observable market data (unobservable inputs).
The following table analyses within the fair value hierarchy the
Company's financial assets at fair value through profit or
loss:
31 March 2023 Level 1 Level 2 Level 3 Total
GBP000s GBP000s GBP000s GBP000s
Fair value through profit or loss
- Investments 5,847 1,992 - 7,839
=========== ======== ======== ========
Within the Company's financial assets classified as Level 2,
securities totalling GBP1,162,559 are traded on the London Stock
Exchange or AIM Market and securities of GBP829,100 are traded on
the Aquis Exchange. The Level 2 securities are valued at the traded
price as at the year end and no adjustment has been deemed
necessary to these prices. However, although these are traded, they
are not regularly traded in significant volumes and hence have been
classified as level 2.
31 March 2022 Level 1 Level 2 Level 3 Total
GBP000s GBP000s GBP000s GBP000s
Fair value through profit or loss
- Investments 4,189 1,784 - 5,973
=========== ======== ======== ========
Within the Company's financial assets classified as Level 2,
securities totalling GBP1,149,000 were traded on the London Stock
Exchange or AIM Market, securities of GBP335,000 traded on the
Aquis Exchange and securities of GBP300,000 traded on The
International Stock Exchange. The Level 2 securities were valued at
the traded price as at the year end and no adjustment was deemed
necessary to these prices. However, although these were traded,
they were not regularly traded in significant volumes and hence
were classified as level 2.
The valuation and classification of the investments are reviewed
on a regular basis. The Board determines whether or not transfers
have occurred between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input which is
significant to the fair value measurement as a whole) at the end of
each reporting period. There were no transfers between levels
during the reporting period (31 March 2022: None)
9. Trade and other receivables
31 March
2023 31 March 2022
GBP000s GBP000s
------------- --------- --------------
Prepayments 54 34
Total 54 34
--------------- --------- --------------
The carrying values of trade and other receivables are
considered to be approximately equal to their fair value.
10. Trade and other payables
31 March 31 March
2023 2022
GBP000s GBP000s
------------------------------ --------- ---------
Investment Advisor fee (note
3 and 16) 15 17
Administration fees (note
3) 18 37
Audit fees 42 40
Director fees payable (note
16) 2 2
Other 101 158
------------------------------- --------- ---------
Total 178 254
------------------------------- --------- ---------
Trade and other payables are non-interest bearing and are
normally settled on 30-day terms. The carrying values of trade and
other payables are considered to be approximately equal to their
fair value.
11. Taxation
Year ended Year ended
31 March 31 March
2023 2022
GBP000s GBP000s
--------------------------------- ----- ----------- -----------
Effect of:
Current tax
Luxembourg (4) (4)
Italy (86) 45
----------------------------------------- ----------- -----------
Total current
tax (90) 41
Deferred tax `
Total deferred
tax - -
Tax (charge)/refund during the year (90) 41
----------------------------------------- ----------- -----------
The Parent Company is exempt from Guernsey taxation.
Movement in temporary differences
Recognised in profit or Foreign exchange loss on
1 April 2022 loss translation 31 March 2023
GBP000 GBP000 GBP000 GBP000
Deferred tax liabilities 72 - 3 75
Which consists of:-
31 March 2023
GBP000
Revaluation of investment property (131)
Other timing difference 206
--------------------------------------- --------------
Total 75
--------------------------------------- --------------
Recognised in profit or Foreign exchange loss on
1 April 2021 loss translation 31 March 2022
GBP000 GBP000 GBP000 GBP000
Deferred tax liabilities 74 - (2) 72
Which consists of:-
31 March 2022
GBP000
Revaluation of investment
property (145)
Other timing difference 217
---------------------------- --------------- --------------------------- -------------------------- --------------
Total 72
---------------------------- --------------- --------------------------- -------------------------- --------------
12. Share capital
Year ended Year ended
31 March 2023 31 March 2022
Number of shares Number of shares
----------------------------------------------- ----------------- -----------------
Shares of no par values issued and fully paid
Balance at the start of the year 33,740,929 33,740,929
Shares issued - -
Balance at the end of the year 33,740,929 33,740,929
----------------- -----------------
No shares were issued by the Company during the year (31 March
2022: none).
13. Net asset value per ordinary share
The Net Asset Value per Ordinary Share at 31 March 2023 is based
on the net assets attributable to the ordinary shareholders of
GBP14,819 million (31 March 2022: GBP13.466 million) and on
33,740,929 (31 March 2022: 33,740,929) ordinary shares in issue at
the Consolidated Statement of Financial Position date.
14 Financial risk management
The Group is exposed to various types of risk which are
associated with financial instruments. The Group's financial
instruments comprise investments, bank deposits, cash, receivables
and payables which arise directly from its operations. The carrying
value of financial assets and liabilities approximates the fair
value. The main risks arising from the Group's financial
instruments are price risk, market risk, credit risk, liquidity
risk, interest risk and foreign currency risk.
Credit risk
Credit risk is the risk that an issuer or counterparty will be
unable or unwilling to meet a commitment which it has entered into
with the Group. Failure of any relevant counterparty to perform its
obligations in respect of these items may lead to a financial loss.
The Company is principally exposed to credit risk in respect of
cash and cash equivalents, investments held at fair value through
profit or loss and trade and other receivables. The credit risk
associated with debtors is limited to trade and other receivables.
It is the opinion of the Board of directors that the carrying
amounts of these financial assets represent the maximum credit risk
exposure as at the reporting date.
The Company to date has not invested in the securities of any
non-Group company which is not quoted or does not have a listing.
All transactions in listed securities are settled/paid upon
delivery using approved brokers. The risk of default is considered
minimal, as delivery of securities sold is only made once the
broker has received payment. Payment is made on a purchase once the
securities have been received by the broker. The trade will fail if
either party fails to meet their obligation.
The credit risk on cash and cash equivalent is considered
limited because the counterparties are banks with acceptable
credit-ratings assigned by international credit-ratings
agencies.
As at 31 March 2023 the Group held GBP225,271 (31 March 2022:
GBP225,617) with Butterfield Bank (Guernsey) Limited, which has a
Standard & Poor's rating of BBB+ (31 March 2022: BBB+), and
GBP314,208 (31 March 2022: GBP343,408) with Banco di Desio e della
Brianza S.p.A with a Fitch rating of BB+ (31 March 2022: BB+).
Property Trust Luxembourg 2 S.à.r.l., held GBP1,079 (31 March
2022: GBP6,723) in a current account with Alpha Group International
(formerly Alpha FX Group plc) ("Alpha Group"), an Electronic Money
Institution authorised and regulated by the UK Financial Conduct
Authority. Whilst Alpha Group does not have a credit rating, the
underlying funds held in the subsidiary's current account are held
with Citibank International Limited, Luxembourg Branch, a
subsidiary of Citigroup Inc, which has a Standard & Poor's
credit rating of BBB+ (31 March 2022: BBB+).
Cash and cash equivalents, investments held at fair value
through profit or loss and trade and other receivables presented in
the Consolidated Statement of Financial Position are subject to
credit risk with maturities within one year. The Company's maximum
credit exposure is limited to the carrying amount of financial
assets recognised as at the Consolidated Statement of Financial
Position date.
At the reporting date, the carrying amounts of the financial
assets, excluding prepayments exposed to risk were as follows:
Within
1-3
one year years Total
As at 31 March 2023 GBP000s GBP000s GBP000s
Cash and cash equivalents 541 - 541
Investments held at fair value
through profit or loss 7,839 - 7,839
Total 8,380 - 8,380
--------------------------------- --------- -------- --------
Within
1-3
one year years Total
As at 31 March 2022 GBP000s GBP000s GBP000s
Cash and cash equivalents 576 - 576
Investments held at fair value
through profit or loss 5,973 - 5,973
Total 6,583 - 6,583
--------------------------------- --------- -------- --------
Liquidity risk
Liquidity risk is the risk that the Group will encounter in
realising assets or otherwise raising funds to meet financial
commitments in a reasonable time frame or at a reasonable
price.
The Group is invested in two asset types, one investment
property (45.68% of Net Assets), which is relatively illiquid, and
investments held at fair value through profit or loss, which are
relatively liquid. The Group prepares forecasts in advance which
enables the Group's operating cash flow requirements to be
anticipated and ensures that sufficient liquidity is available to
meet foreseeable needs and to allow any surplus cash assets to be
invested safely and profitably. The Group also monitors the cash
position in all subsidiaries to ensure that any working capital
requirements are addressed as early as possible. As at 31 March
2023 and 31 March 2022, the Group had no significant financial
liabilities other than short-term payables.
Interest rate risk
Interest rate risk is the risk that the fair value of future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group's interest-bearing
financial assets and liabilities expose it to risks associated with
the effects of fluctuations in the prevailing levels of market
interest rates on its financial position and cash flows. As at the
year end, the Group's overall interest rate risk is monitored on a
quarterly basis by the Board. As the vast majority of the Group's
investments held at fair value through profit or loss are not
interest-bearing and are not directly subject to interest rate
risk, the exposure to interest rate risk is not significant.
Concentration risk
As at 31 March 2023, the Group held one Investment Property
representing 45.68% of NAV (31 March 2022: 54.42%). The Company
also held various investments, more details of which are set out
below. The largest investment exposure was to Smith News Plc,
representing 33.25% of NAV (31 March 2022: 25.28%).
The Group pursues a policy of diversifying its risk in
accordance with its Investment Policy, which is detailed below.
Save for the Curno Asset until such time as it is realised, the
Group intends to adhere to the investment restrictions set out
therein.
Foreign currency risk
The Group is invested in assets denominated in a currency other
than pounds sterling (that is Euros and US Dollars), the Company's
functional and presentation currency, and the Consolidated
Statement of Financial Position may be significantly affected by
movements in the exchange rate of such currencies against pounds
sterling. The following table sets out the total exposure to
foreign currency risk and the net exposure to foreign currency of
the Group's monetary and non-monetary assets and liabilities based
on notional amounts.
Net
Assets Liabilities exposure
GBP000s GBP000s GBP000s
------------- ------ -------- ------------ ---------
At 31 March
2023: Euro 7,157 (318) 6,839
At 31 March
2022: Euro 7,757 (363) 7,394
-------------- ------- -------- ------------ ---------
Foreign currency risk sensitivity
The following table demonstrates the sensitivity to potential
fluctuations in the Euro exchange rate (ceteris paribus) of the
Group's equity.
Effect
Increase/decrease on equity
in exchange and income
rate GBP000s
------------- ------ ------------------ -----------
At 31 March
2023 Euro +5% 342
Euro -5% (342)
At 31 March
2022 Euro +1% 82
Euro -1% (82)
--------- ---------- ------------------ -----------
The sensitivity rates of 5% for Euros as at 31 March 2023 (31
March 2022: 1% for Euros) are regarded as reasonable in light of
the recent volatility of pounds sterling vs the Euro. Any changes
in the foreign exchange rate will directly affect the profit and
loss, allocated to the foreign currency reserve of the Consolidated
Statement of Changes in Equity.
Market risk
Market risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market prices. The Group's activities expose it primarily to the
market risks of changes in market prices.
Market price risk
Market price risk arises mainly from the uncertainty about
future prices of the financial instruments held by the Group. It
represents the potential loss the Group may suffer through holding
market positions in the face of price movements.
The Group's investment portfolio is exposed to market price
fluctuations, which are monitored by the Investment Advisor in
pursuance of the investment objectives and policies.
Market price sensitivity analysis
The sensitivity analysis below has been determined based on the
exposure to equities risks at the reporting date. The 20%
reasonably possible price movement for equity-related securities
(31 March 2022: 20%) is based on the Investment Advisor's best
judgement. The sensitivity rate for equity-related investments of
20% is regarded as reasonable, as in the Investment Advisor's view
there is expected to be considerable volatility in equity markets
in the coming year.
A 20% increase in the market prices of equity-related
investments as at 31 March 2023 would have increased the net assets
attributable to shareholders by GBP1,567,752 (31 March 2022:
GBP1,194,615) and a 20% change in the opposite direction would have
decreased the net assets attributable to shareholders by an equal
but opposite amount.
Actual trading results may differ from the above sensitivity
analysis and these differences could be material.
Fair value
Financial assets at fair value through profit or loss are
carried at fair value. Other assets and liabilities are carried at
cost which approximates fair value.
IFRS 7 requires the Group to classify a fair value hierarchy
which reflects the significance of the inputs used in making the
measurements. IFRS 7 establishes a fair value hierarchy which
prioritises the inputs to valuation techniques used to measure fair
value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities
(Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of the fair value
hierarchy under IFRS 7 are as follows -
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
which are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability which are not based
on observable market data (unobservable inputs).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. For this purpose, the
significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses
observable inputs which require significant adjustment based on
unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors
specific to the asset or liability.
The determination of what constitutes 'observable' requires
significant judgement by the Directors. The Directors consider
observable data to be market data that is readily available,
regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources which are actively
involved in the relevant market.
Assets classified in Level 1 consist of listed or quoted
equities or equity-related securities, options and bonds which are
issued by corporate issuers, supra-nationals or government
organisations.
Assets classified in Level 2 are investments such as funds
fair-valued using the official NAV of each fund as reported by each
fund's independent administrator at the reporting date. Assets
invested in quoted equity-type products in a less active market are
classified as equity (see note 8). Options and foreign exchange
forward contracts are fair valued using publicly available data.
Foreign exchange forward contracts would be shown as derivative
financial assets and liabilities.
Assets classified in Level 3 consist of investments for which no
market exists for trading, for example investments in liquidating
or illiquid funds, which would be reported using the latest
available official NAV less dividends declared to date of each fund
as reported by each fund's independent administrator at the last
reporting date. Where a market exists for trading in illiquid
funds, these are classified in Level 2.
The Group recognises any transfers between levels of fair value
hierarchy as of the end of the reporting period during which the
transfer has occurred. During the year ended 31 March 2023 and the
year ended 31 March 2022, there were no transfers between levels of
fair value hierarchy.
15. Reserves
(a) Revenue reserves
Revenue reserves arise as a result of the profit or loss created
by the Group.
(b) Distributable reserves
Distributable reserves arose from the cancellation of the share
premium account pursuant to the special resolution passed at the
EGM on 13 April 2005 and approved by the Royal Court of Guernsey on
24 June 2005.
(c) Foreign currency reserves
Foreign currency reserves arise as a result of the translation
of the Financial Statements of foreign operations, the functional
and presentation currency of which is not pounds sterling.
16. Related party transactions
The Directors are responsible for the determination of the
Company's investment objective and policy and have overall
responsibility for the Group's activities including the review of
investment activity and performance.
Mr Nixon, a Director of the Company, is also Founding Partner
and a Designated Member of Worsley Associates LLP . The total
charge to the Consolidated Statement of Comprehensive Income during
the year in respect of Investment Advisor fees to Worsley
Associates was GBP176,690 (31 March 2022: GBP181,628) of which
GBP15,277 (31 March 2022: GBP8,713) remained payable at the year
end.
The fees and expenses payable to the Investment Advisor are
explained in note 3.
Upon appointment of Worsley Associates as Investment Advisor (31
May 2019), Mr Nixon waived his future Director's fee for so long as
he is a member of the Investment Advisor.
As at 31 March 2023, Mr Nixon held 29.88% of the shares in the
Company (31 March 2022: 29.88%).
As at 31 March 2023, Mr Scott held 2.01% of the shares in the
Company (31 March 2022: 1.19%).
The aggregate remuneration and benefits in kind of the Directors
and directors of its subsidiaries in respect of the year ended 31
March 2023 amounted to GBP46,086 (31 March 2022: GBP45,994) in
respect of the Group of which GBP35,000 (31 March 2022: GBP35,000)
was in respect of the Company. Please refer above for further
details on the Directors' fees.
All the above transactions were undertaken at arm's-length.
17. Commitments and contingent liability
As at 31 March 2023 the Company had no commitments.
Disposal of the Curno property before 1 January 2024 may,
depending on the terms, incur Italian taxes which would be material
in the context of Shareholders' Funds. As at the 31 March 2023 and
up to the date of approval of these financial statements, no
disposal was in discussion. As a result, no provision has been
included in these Financial Statements.
18. Segmental analysis
As at 31 March 2023, the Group has two segments (31 March 2022:
two). The following summary describes the operations in each of the
Group's reportable segments for the current year:
Property Group Management of the Group's property asset.
Parent Company Parent Company, which holds listed equity investments
Information regarding the results of each reportable segment is
shown below. Performance is measured based on segment profit/(loss)
for the year, as included in the internal management reports that
are reviewed by the Board, which is the Chief Operating Decision
Maker ("CODM"). Segment profit is used to measure performance as
management believes that such information is the most relevant in
evaluating the results of certain segments relative to other
comparable operators.
The accounting policies of the reportable segments are the same
as the Group's accounting policies described in note 2.
(a) Group's reportable segments
Continuing Operations
31 March 2023 Property Group Parent Company Total
GBP000 GBP000 GBP000
External revenue
Gross property income 769 - 769
Property operating expenses (148) - (148)
Unrealised loss on investment property (789) - (789)
Net gain on investments at fair value through profit or loss - 1,765 1,765
Other income - 52 52
Total segment revenue (168) 1,817 1,649
Expenses
General and administrative expenses (134) (394) (528)
--------------- --------------- -------
Total operating expenses (134) (394) (528)
(Loss)/profit before tax (302) 1,423 1,121
Income tax charge (90) - (90)
--------------- --------------- -------
(Loss)/profit after tax (392) 1,423 1,031
(Loss)/profit for the year (392) 1,423 1,031
--------------- --------------- -------
Total assets 7,158 8,075 15,233
--------------- --------------- -------
Total liabilities 319 95 414
--------------- --------------- -------
Continuing Operations
31 March 2022 Property Group Parent Company Total
GBP000 GBP000 GBP000
External revenue
Gross property income 742 - 742
Property operating expenses (144) - (144)
Unrealised loss on investment property (722) - (722)
Net gain on investments at fair value through profit or loss - 102 102
Other income - 6 6
Total segment revenue (124) 108 (16)
Expenses
General and administrative expenses (144) (386) (530)
--------------- --------------- -------
Total operating expenses (144) (386) (530)
(Loss)/profit before tax (268) (278) (546)
Income tax charge 41 - 41
--------------- --------------- -------
(Loss)/profit after tax (227) (278) (505)
(Loss)/profit for the year (227) (278) (505)
--------------- --------------- -------
(a) Group's reportable segments
Continuing Operations
31 March 2022 Property Group Parent Company Total
GBP000 GBP000 GBP000
Total assets 7,746 6,217 13,963
--------------- --------------- -------
Total liabilities 314 183 497
--------------- --------------- -------
(b) Geographical information
The Company is domiciled in Guernsey. The Group has subsidiaries
incorporated in Europe.
The Group's revenue from external customers from continuing
operations and information about its segment non-current assets by
geographical location (of the country of incorporation of the
entity earning revenue or holding the asset) are detailed
below:
Revenue from External Customers Non-Current Assets
31 March 2023 31 March 2023
GBP000 GBP000
-------- -------------------------------- -------------------
Europe 769 6,770
-------------------------------- -------------------
Revenue from External Customers Non-Current Assets
31 March 2022 31 March 2022
GBP000 GBP000
-------- -------------------------------- -------------------
Europe 742 8,086
-------------------------------- -------------------
19. Net asset value reconciliation
The following is a reconciliation of the net asset value per
share attributable to ordinary shareholders as presented in these
Financial Statements to the unaudited net asset value per share
reported to the London Stock Exchange.
NAV per Ordinary
Share
31 March 2023 (pence)
---------------------------------------------------------------------------- -----------------
Net Asset Value reported to London Stock Exchange (unaudited) 44.30
Decrease in value of Investments held at fair value through profit or loss (0.38)
-------------------------------------------------------------------------------- -----------------
Net Assets Attributable to Shareholders per Financial Statements (audited) 43.92
-------------------------------------------------------------------------------- -----------------
20. Subsequent events
There were no post year end events which require disclosure in
these Financial Statements.
Portfolio statement (unaudited)
as at 31 March 2023
Fair value % of Group
Currency GBP'000 Net Assets
------------------------------------- ---------- ----------- ------------
Property
UCI Curno EUR 6,770 45.68%
Less: lease incentive EUR (737) (4.97%)
----------- ------------
Total 6,033 40.71%
----------- ------------
Securities
Smith News Plc GBP 4,928 33.25%
Amedeo Air Four Plus Limited GBP 617 4.16%
Northamber Plc GBP 553 3.73%
Daniel Thwaites PLC GBP 490 3.31%
Shepherd Neame Limited GBP 339 2.29%
J. Smart & Co (Contractors) PLC GBP 256 1.73%
----------- ------------
Total disclosed securities 7,183 48.47%
Other securities (none greater than
2% of Net Assets) GBP 656 4.43%
Total securities 7,839 52.90%
----------- ------------
Total investments 13,872 93.61%
----------- ------------
Investment Objective and Policy
Investment Objective
The Company's investment objective is to provide shareholders
with an attractive level of absolute long-term return, principally
through the capital appreciation and exit of undervalued
securities. The existing real estate asset of the Company will be
realised in an orderly manner, that is with a view to optimising
the disposal value of such asset.
Investment Policy
The Company aims to meet its objectives through investment
primarily, although not exclusively, in a diversified portfolio of
securities and related instruments of companies listed or admitted
to trading on a stock market in the British Isles (defined as (i)
the United Kingdom of Great Britain and Northern Ireland; (ii) the
Republic of Ireland; (iii) the Bailiwicks of Guernsey and Jersey;
and (iv) the Isle of Man). The majority of such companies will also
be domiciled in the British Isles. Most of these companies will
have smaller to mid-sized equity market capitalisations (the
definition of which may vary from market to market, but will in
general not exceed GBP600 million). It is intended to secure
influential positions in such British quoted securities with the
deployment of activism as required to achieve the desired
results.
The Company, Property Trust Luxembourg 2 SARL and Multiplex 1
SRL ("the Group") may make investments in listed and unlisted
equity and equity-related securities such as convertible bonds,
options and warrants. The Group may also use derivatives, which may
be exchange traded or over-the-counter.
The Group may also invest in cash or other instruments including
but not limited to: short, medium or long term bank deposits in
pounds sterling and other currencies, certificates of deposit and
the full range of money market instruments; fixed and floating rate
debt securities issued by any corporate entity, national
government, government agency, central bank, supranational entity
or mutual society; futures and forward contracts in relation to any
other security or instrument in which the Group may invest; put and
call options (however, the Group will not write uncovered call
options); covered short sales of securities and other contracts
which have the effect of giving the Group exposure to a covered
short position in a security; and securities on a when-issued basis
or a forward commitment basis.
The Group pursues a policy of diversifying its risk. Save for
the Curno Asset until such time as it is realised, the Group
intends to adhere to the following investment restrictions:
-- not more than 30 per cent. of the Gross Asset Value at the
time of investment will be invested in the securities of a single
issuer (such restriction does not, however, apply to investment of
cash held for working capital purposes and, pending investment or
distribution, in near cash equivalent instruments, including
securities issued or guaranteed by a government, government agency
or instrumentality of any EU or OECD Member State or by any
supranational authority of which one or more EU or OECD Member
States are members);
-- the value of the four largest investments at the time of
investment will not constitute more than 75 per cent of Gross Asset
Value;
-- the value of the Group's exposure to securities not listed or
admitted to trading on any stock market will not exceed in
aggregate 35 per cent. of the Net Asset Value;
-- the Group may make further direct investments in real estate
but only to the extent such investments will preserve and/or
enhance the disposal value of its existing real estate asset. Such
investments are not expected to be material in relation to the
portfolio as a whole, but in any event will be less than 25 per
cent. of the Gross Asset Value at the time of investment. This
shall not preclude Property Trust Luxembourg 2 SARL and Multiplex 1
SRL (the "Subsidiaries") from making such investments for
operational purposes;
-- the Company will not invest directly in physical commodities,
but this shall not preclude its Subsidiaries from making such
investments for operational purposes;
-- investment in the securities, units and/or interests of other
collective investment vehicles will be permitted up to 40 per cent.
of the Gross Asset Value, including collective investment schemes
managed or advised by the Investment Advisor or any company within
the Group; and
-- the Company must not invest more than 10 per cent. of its
Gross Asset Value in other listed investment companies or listed
investment trusts, save where such investment companies or
investment trusts have stated investment policies to invest no more
than 15 per cent. of their gross assets in other listed investment
companies or listed investment trusts.
The percentage limits above apply to an investment at the time
it is made. Where, owing to appreciation or depreciation, changes
in exchange rates or by reason of the receipt of rights, bonuses,
benefits in the nature of capital or by reason of any other action
affecting every holder of that investment, any limit is breached by
more than 10 per cent., the Investment Advisor will, unless
otherwise directed by the Board, ensure that corrective action is
taken as soon as practicable.
Borrowing and Leverage
The Group may engage in borrowing (including stock borrowing),
use of financial derivative instruments or other forms of leverage
provided that the aggregate principal amount of all borrowings
shall at no point exceed 50 per cent. of Net Asset Value. Where the
Group borrows, it may, in order to secure such borrowing, provide
collateral or security over its assets, or pledge or charge such
assets.
Corporate Information
Directors (All non-executive) Registered Office*
W. Scott (Chairman) 1 Royal Plaza
R. H. Burke Royal Avenue
B. A. Nixon St Peter Port
Guernsey, GY1 2HL
Investment Advisor Administrator and Secretary*
Worsley Associates LLP Sanne Fund Services (Guernsey) Limited
First Floor 1 Royal Plaza
Barry House Royal Avenue
20 - 22 Worple Road St Peter Port
Wimbledon, SW19 4DH Guernsey, GY1 2HL
United Kingdom
Financial Adviser Corporate Broker
Shore Capital and Corporate Limited Shore Capital Stockbrokers Limited
Cassini House Cassini House
57 St James's Street 57 St James's Street
London, SW1A 1LD London SW1A 1LD
United Kingdom United Kingdom
Independent Auditor Registrar
BDO Limited Computershare Investor Services (Guernsey)
Place du Pré Limited
Rue du Pré 1(st) Floor
St Peter Port Tudor House
Guernsey, GY1 3LL Le Bordage
St Peter Port
Guernsey, GY1 1DB
Registration Number
43007
*With effect from the 13 February 2023, the registered office of
the Company, the Administrator and Secretary changed from Sarnia
House, Le Truchot, St Peter Port, Guernsey, GY1 1GR to Royal Plaza,
Royal Avenue, St Peter Port, Guernsey, GY1 2HL
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